Why Nigeria needs to invest in Agriculture
(Despite some very interesting arguments to the contrary)
I had a series of recent conversations on Twitter where people raised some interesting points against Nigeria’s investment in agriculture for economic growth.
The Nigerian government at multiple times has been consistent (at least verbally) with their interest in growing in the agricultural sector in a bid to diversify the economy. They have always advertised agriculture as the next best economic alternative especially since crude oil is no longer a safe haven and seeing as Nigeria was once a major agricultural producer before abandoning the sector in preference for the ‘black gold’.
Personally, I agreed with this and I always thought it was a no-brainer for everybody else until recently. The main arguments to the contrary that I uncovered were:
- Nigeria is not in a food crisis and it’s fine if we keep importing most of our food since many other countries also import one food item or the other.
- The Nigerian government should focus on encouraging service industries instead e.g tech, tourism and entertainment.
- The Nigerian government should focus on providing better infrastructure instead, like electricity and roads because every industry including agriculture needs infrastructure.
- Agriculture is an unpredictable investment due to the uncertainty climate change, diseases, pests (like the recent locust swarms in East Africa) and insecurity (Fulani herdsmen).
By the way, Nigeria does have a food crisis. Over 8.5 million people are starving, mostly due to the insecurity in the North East.
I could understand the rest of the points though, and I noticed the issue of infrastructure came up in more than one discussion. Of course improving agriculture would require infrastructure: access roads to farms, reliable electricity for storage facilities, rails & roads for transport and so on. If Nigeria had better roads, electricity, internet and facilities a lot of industries would obviously thrive. But unfortunately that isn’t the case. And even though the Nigerian government is constantly making plans and budgets for new roads and railways, we don’t know when all of our roads will finally be motor-able. It took the contracted Chinese engineering firm 3 years to complete the Abuja-Kaduna railway. Meanwhile, the Lagos-Ibadan segmented which was scheduled for completion in 2016 has apparently now been postponed to later this year, and was even included in the budget for the newly approved loans along with the long awaited Mambilla power project; which when finished should be one of the biggest power plants in Africa but unfortunately is still a far-away hope.
So what happens in spite of this? It seems like the entire nation would be left in a complete deadlock if we all decided to bank on infrastructure being put in place.
N.B For clarity, ‘investment in agriculture’ doesn’t simply mean giving money to farmers. It simply denotes intervention in the current system by introducing mechanization, large scale/intensive farming, advisory services and research, strengthening private investments in input markets and other areas of value chain including processing and post-harvest services.
In many economic development models, initial focus is placed on primary industries like agriculture. One reason is because developing countries usually start out with majority of their population engaged in agriculture. This is already the case in Nigeria (and most African countries) with 60% of Nigeria’s population being involved in subsistence farming.
Most industrial countries today, through intense development of agriculture were able to achieve surplus food and income for these rural, subsistence population who, with increased purchasing power (from selling their goods and from exports and trade) naturally increased demand for other non-Agric commodities and industrialization.
Of course most developed countries went through these stages many decades ago, so one could argue that these models are outdated, which is true — development today isn’t so linear. But whichever way you look at it, agriculture has always had a major role to play in development.
China, for example which recently became an industrialized nation adopted a more intensive and disruptive growth model by investing massively in infrastructure, industry and agriculture side by side. China now, with it’s population of over 1 billion currently produces most of their staple foods; importing a few tons of rice, wheat while exporting numerous agricultural products to Europe and the rest of the world, including Africa. For context, China’s top 5 exports are: Cotton, tea, rice, potatoes and soybeans.
(If you’ve got time, I’d recommend this insightful article on How China is feeding it’s population)
A similar strategy is currently being used by India; currently the fastest growing economy and becoming one of the world’s top exporters of beef, rice, cotton and many other important agricultural commodities.
Most; if not every developed country has agriculture closely linked to their industrial development. In Nigeria, we’ve sort of managed to leapfrog & create pockets of industry here and there possibly because of the wealth generated from the nation’s crude oil; on which our over-dependence is no longer sustainable.
A current challenge now in the EU and US is that with development and industrialization, the population gradually shifted away from primary production industries as agriculture became largely mechanized and intensified. Now, there is general lack of human resources for agriculture. Hence the race for automated systems and the EU’s large agricultural subsidies to keep the sector appealing.
The opposite is the case in Nigeria. With our high population made up mostly of youth who are unemployed, and the low barrier of entry into agriculture, it’s surprising that more young people are not interested in the sector. We have a case where African youth see agriculture in a negative light; probably due to the less-than-glamorous mental images they have of manual labor and the fact that the government is not doing nearly enough to provide the right incentives to encourage youth to go into the sector.
Besides being directly engaged in primary production, agriculture has the opportunity for indirect job creation from extension services to data analysts, genetics researchers, business consultants, engineers and so on. There are also countless opportunities for innovation that entrepreneurs can find along the value chain. The global food and agribusiness industry is worth US $5 trillion. In 2016, The EU imported 93 tons of food worth €101billion and exported 91 tons of food worth €84 billion.
Take Germany for example. From the image above you can see how the food supply worth €80 billion (€32.4b from domestic production and €47.7b worth of imports) was amplified through value addition to provide a value of €226 billion; €189b of which fed the population sufficiently and then exported €37.9billion.
This is possible because of their strong agro-value chains, closely linked to intensive agricultural production.
Here’s why Nigeria in particular has so much agricultural potential:
- We also have a lot of arable soil that is unused while the rest of the world continues to feed us. We also have a favorable climate for growing many high-demand cash crops e.g palm oil, coffee, groundnuts.
- 60% of the population is currently involved in subsistence agriculture. Ignoring agriculture would mean finding some other industry to employ these people.
- 22% of Nigeria’s GDP comes from agriculture. For 2019, this amounted to about N99 billion and investing in improving yields is an opportunity to significantly increase this number.
- After crude petroleum products, our major exports are agricultural raw materials e.g cocoa beans, cashew, tobacco; and this is with our sub-par agricultural industry. So Imagine what would happen if we focus is on optimizing productivity to reach it’s potential. E.g grow more, process these products (add value & then export).
- Barriers to entry into agriculture and agribusiness aren’t so high and can be even easier with the right policy incentives.
With Nigeria’s fast growing population, the country’s food import bill (Already estimated at N1 billion per day; an unsustainable figure which is still not even sufficiently feeding the country) is also going to keep increasing as food will always be in demand. Meanwhile what other commodities are we exporting to balance this out, as crude runs out or as the world finally finds better, renewable energy sources?
“Africa’s annual food import bill of $35 billion, estimated to rise to $110 billion by 2025, weakens African economies, decimates its agriculture and exports jobs from the continent.”
— Akinwumi Adesina, President of the African Development Bank (AfDB).
I like the argument that Nigeria should be service-oriented instead and focus on industries like tech, tourism and entertainment. I agree to some extent. Already, the Service sector accounts for 60% of Nigeria’s GDP. Nigerian musicians, actors, writers and software developers are globally in demand, and with more supportive and protective policies, these sectors can really flourish. But the discussion is always made out to be an either/or narrative, which isn’t the case. Our population size gives us the potential advantage to disrupt linear development models by engaging in more than one growth path at once. Science, technology and other tertiary services industries will always work hand in hand to improve the activities in other industries.
As for the infrastructure problem, it will continue to be a need and a hindrance even to IT and tourism and every form of industry. However, these are things we may initially have to keep working around if we truly want to see any progress.
I’m also hopeful that some deliberate progress in an industry could act as an incentive to speed up infrastructure development. For example, increased interest and activity in the software industry could create higher demand for better internet services. Similarly, clustering of large-scale agricultural trade, production and processing activities can create pressure and kindle the prioritization of specific roads and railways and other value chain support services and facilities.
