Today, we turn our attention to Nigeria’s agricultural sector, which according to the Nigerian Bureau of Statistics (NBS) contributed c.26% of Nigeria’s GDP in 2022. According to the IMF, the country’s agricultural sector also accounts for over 50% of its labour force. Nonetheless, the sector faces many challenges which limit output, productivity and prosperity of agricultural labour. Some of these challenges include Nigeria’s land tenure system, relatively low fertilisation levels, sub-par agricultural research, and the use of traditional systems. The entrenchment of these headwinds have led to a significant rise in Nigeria’s food import bill, which is now over USD10bn/annum, according to the NBS’s trade statistics.

Notably, the agricultural sector expanded by 2.05% in Q4’22 (versus 3.58% in Q4’21) and 1.94% y/y in FY 2022 (from 2.1% y/y growth in FY 2021). The sector’s growth slowed between Q2’22 and Q3’22, likely impacted by the large-scale flooding in some parts of country.

Successive Nigerian governments have implemented several initiatives and programmes to boost agricultural productivity. These include the Agriculture Promotion Policy (APP), Presidential Economic Diversification Initiative, and Export Promotion Incentives, amongst many others.

However, private-led funding to the sector remains critically low. The IMF estimates that only 5% of total private-led credit is allocated to the sector, rising over the past two years due to substantial support from the central bank of Nigeria (CBN). The CBN, in Jan ’23, listed cumulative disbursements of NGN1.1trn under the Anchor Borrowers Programme (ABP). The ABP helped raise rice production in Nigeria to 9.0m MT in 2021 from 5.4m MT in 2015.

According to the "Nigeria select issues" report released by the IMF published last month, agriculture productivity in Nigeria can be raised by 1) improving yields by combining inputs, especially inorganic fertilizer and improved seeds; 2) developing adequate storage facilities and well-functioning warehouse receipt systems; and 3) supporting collateral and interregional mobility through completing the land tenure registration system.