Mitigating Barriers to Agric Trade and Investments
The agricultural sector is being hindered by myriads of challenges that have deprived it from reaching its full potentials. Gilbert Ekugbe writes
The agricultural sector is not immune from the environmental and socio-cultural challenges facing other sectors of the Nigerian economy. For instance, Foreign Direct Investment (FDI) in the Nigerian agricultural sector dropped to $59.17 million in the first six months of 2022, which is the lowest in five years. It has also been identified that insecurity has remained one of the top challenges hindering local and foreign investors from investing in the country’s agricultural sector.
Data from the National Bureau of Statistics (NBS) revealed that the $59.17 million capital that was imported into the agricultural sector in the half-year of 2022, represented a decline of 74.9 per cent from $235.87 million that was recorded during the same period in 2018.
The statistics body stated that in the first three months of 2022, foreign investments in the country’s agricultural sector stood at $1.76 million, a 98.7 per cent decline from $130.90 million in the same period of 2018.
Insecurity
Insecurity still remained a major stumbling block to agriculture investments. Many investors are now shying away from investing in the agriculture space as a result of the worsening security challenges in the country. The spate of insecurity is a major risk that cannot be shoved aside when making investment decisions. No investor in the world would put his or her hard earned resources into an investment he or she is not certain of a Return on Investment (RoI)
The effect is that many farmers have abandoned their farms out of fear of either being kidnapped or killed. Stakeholders have continued to call on political gladiators to find lasting solutions to the hydra-headed security challenges hindering investments into Nigeria’s agricultural sector.
Definitely, the resultant effect would mean increase in food prices as evident in Nigeria. Many impoverished Nigerians have continued to go to bed hungry due to the dwindling disposable income to afford food items hence, the urgent need to improve the nation’s security apparatus is not out of place in the federal government’s quest to attain food security.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, told THISDAY in a telephone interview that the biggest component of agriculture is crop farming, pointing out that in locations where these activities are being carried out, there have been a lot of insecurity issues hindering the activities of both peasant or commercial farmers, players in backward integration space. According to him, operating in these regions has been extremely difficult because of insecurity.
Yusuf said: “Insecurity is the biggest constraints to investment in agriculture. If you look at our growth, you will see that the agricultural sector is still struggling even though it is not contracting, but it posted just about 2.0 per cent to GDP growth in Q3 of 2022.”
Similarly, the Food and Agriculture Organisation (FAO), has said that poor budgetary allocations to the sector from the national budget has been hindering the removal of some of the structural bottlenecks that have been stunting the growth of the sector and depriving it from leveraging on private investments.
The FAO Assistant Director-General and Regional Representative for Africa, Mr. Abebe Haile-Gabriel, said at a dialogue session organised by the FAO and the Government of Ghana, in collaboration with the Alliance for a Green Revolution in Africa (AGRA) in Ghana that “engaging in commercial agriculture is a business in itself. Evidence indicates that returns on investments in agriculture could be even higher than in many other sectors.”
Only recently, the African Development Bank (AfDB) stated that Africa’s push for food sovereignty and resilience would depend on investments and partnerships. The bank explained that with the removal of barriers to agricultural development and aided with new investments, Africa’s agricultural output could increase from $280 billion per year to $1 trillion by 2030.
“This is the time to invest in Africa’s future. The continent has more than 60 per cent of the world’s remaining arable land, and millions of Africans are productive in the agriculture sector,” the President of the AfDB, Dr. Akinwumi Adesina, said.
Rural-urban migration
The lackluster attitude of many Nigerian youths towards farming has also deterred investment inflow into the sector. Many youths are abounding agriculture and moving to the urban areas in search of white collar jobs. This has left farming in the hands of the ageing population in the country.
Studies have shown that youths are not interested in farming due to Nigeria’s inability to embrace mechanised farming processes. However, the Federal Ministry of Agriculture and Rural Development (FMARD) stated that the goal of its tractorisation programme in the agricultural sector is to encourage mechanised farming, boost food and nutrition security while also creating more jobs for the teeming unemployed youths in the country in the agricultural sector.
Although the tractorisation scheme is meant to attract youths into the agricultural space, whether it achieve this goal or not would depend on the effectiveness of its implementation.
“We also need more technology in agriculture because virtually almost all the sectors are driven by technology, but unfortunately for us we still depend on hoes and cutlasses, but we must do a lot more in that regard. If we use more technology, it will attract many youths in the sector,” Yusuf advised.
Inputs, machinery Cost, climate change
The cost of farm input is also a big factor hindering the flow of investment into the sector. Equipment such as tractors, harvesters and the likes are still being imported as well as agro chemicals which has made many farmers to abandon their farms since they have little or nothing to go by.
Nigeria’s heavy dependence on rain-fed agriculture has made most of the lands in the county lose their fertility due to climate change where arable lands are no longer as fertile as they used to hindering farmers’ productivity levels to meet Nigeria’s food demands.
A recent study by nature, climate change has reduced global agriculture productivity by 21 per cent since 1961. At the same time, food systems represent a third of total greenhouse gas emissions and are a major contributor to biodiversity loss.
The International Food Policy Research Institute (IFPRI) said that agriculture is extremely vulnerable to climate change. It stated that higher temperatures would reduce yields of desirable crops and encourage weed and pest proliferation.
“Changes in precipitation patterns increase the likelihood of short-run crop failures and long-run production declines. Although there will be gains in some crops in some regions of the world, the overall impacts of climate change on agriculture are expected to be negative, threatening global food security,” the IFPRI warned.
The institute added that populations in the developing world, which are already vulnerable and food insecure, are likely to be the most seriously affected, pointing out that in 2005, nearly half of the economically active population in developing countries representing 2.5 billion people- relied on agriculture for its livelihood.
Stakeholders’ recommendation
The CPPE’s boss stated the need for Nigeria to tackle the issue of insecurity. He pointed out that large scale farming required large expanse of land, which is available in the north where insecurity is thriving.
In his words: “Insecurity in these regions is extremely high. We need to address the issue of agricultural input and machinery. We need to waive import duty on them so that they do not pay duties at all. We also need to subsidise these farm equipment and other agricultural inputs like pesticides and herbicides.”
He added: “We also need to support our research institutes because most of them are wasting away. They are not being properly funded and not playing the role they should. We must also invest largely in irrigation facilities and not continue to rely on rain-fed agriculture because it is not sustainable. We should be able to farm all year round. The farmers cannot make these investments, but the federal government’s responsibility so that the farmers can key into it.
“There is also the need to combat the challenge of desertification, climate change, flooding because it is affecting a lot of agricultural location while also strengthening the agric value chain because agric is not just about farming. All sets of the value chain needs to be strengthened so that the entire value chain will be uplifted.”
The National President of All Farmers Association of Nigeria (AFAN) said that the roles of the private and public sectors should be complimentary. The public sector should be providing the enabling environment that would enable the private sector investments to grow sustainably.
“It should be understood that the private sector investments actually are the engine room of growth whereas the public sector’s effectiveness is sustained by sustainable investments by the private sector because these generate jobs to cater for the teeming youth requiring such opportunities,” he said.
He stressed that sustainable investments in agriculture are the fastest way to get people out of poverty in Nigeria and Africa as a whole.
To sustain these investments, he said that economic managers must be focused on implementing laudable policies through government officials that were appointed on merit. This would enable Nigeria to attain sustainable investments in agriculture and thereby attain reasonable level of food sufficiency and the much desired food security.
“To harness Nigeria’s potential in Agro-industrial investment there must be sustainable public sector incentives and consistent policies as well as focused implementation of time tested programs designed to promote sustained private sector participation,” he advised.
The AFAN boss canvassed for the promotion of access to credit, science and technology, enabling laws governing trade and investment as well as good investment policies in order to harness private sector participation needed to make meaningful development in agriculture.
“Patience and perseverance are keys to any successful sustainable Agro-industrial investment so Nigeria should incentivize private sector investments generally,” he said.
On his part, the Former Executive Director, Lake Chad Research Institute, Maiduguri and Borno States, Dr. Oluwasina Olabanji, said that a paradigm shift toward a private sector led agro business is needed for Nigeria to attain food security.
“To develop the private sector as a key enabler of sustainable agricultural revolution and industralisation, investment in agricultural extension systems by reviving the moriboud Agricultural Development Programmes (ADPs) and adequate support to National Agricultural Research System (NARS).”
He called on the private sector to contribute their quota in capital investment, particularly in the face of dwindling public resources and serve as service providers by investing in agricultural inputs (seed, fertilizer, agro chemicals), mechanisation (tractor, seed planter, threshers, combine harvester), value addition (processing, utilisation and marketing).
“Finally, the private sector should invest in commodity exchange. If these roles are properly implemented in Nigeria, no doubt, food and nutrition security is assured and the nation will be a net exporter of food to African countries,” he averred.
