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Beyond Oil: Transforming the Nigerian Agricultural Sector

In Africa, agricultural holdings are generally small and scattered; farming is often of the subsistence variety, characterized by simple tools and shifting cultivation.

Despite the intense concentration on manufacturing, mining and oil sectors, it is understood by many Nigerians that agriculture remains one of the forces contributing to the surging growth of Nigeria’s economy since country’s independence.

A Green Economy can be considered as an alternative vision for growth and development; one that can generate growth and improvement in people’s lives in ways consistent with sustainable development. To drive this vision, the role of finance cannot be over-emphasized since no tangible investment can be done without funds.

Nigeria’s Federal Ministry of Agriculture and Rural Development (FMARD) has identified low agricultural productivity as a major barrier to national development. In response, it has developed the Agriculture Promotion Policy (2016-2020), also called “The Green Alternative.” The Agriculture Promotion Policy 2016-2020 document, “The Green Alternative” is the outcome of an intensive consultative process starting in November 2015 through April 2016, and involving multiple stakeholders.

The new policy regime, tagged the Agriculture Promotion Policy (APP) Policy is founded on the following guiding principles, a number of which are carryovers from the ATA reflecting the strong desire for policy stability. New elements added reflect the lessons from the ATA, as well as priorities emerging from the aspirations of the Buhari Administration:

  • Agriculture as a business – focusing the policy instruments on a government-enabled, private sector-led engagement as the main growth driver of the sector. This essential principle was established in the ATA and will remain a cardinal design principle of Nigeria’s agriculture policies going forward.
  • Agriculture as key to long-term economic growth and security—focusing policy instruments to ensure that the commercialization of agriculture includes technologies, financial services, inputs supply chains, and market linkages that directly engage rural poor farmers because rural economic growth will play a critical role in the country’s successful job creation, economic diversity, improved security and sustainable economic growth.
  • Food as a human right – focusing the policy instruments for agricultural development on the social responsibility of government with respect to food security, social security and equity in the Nigerian society; and compelling the government to recognize, protect and fulfil the irreducible minimum degree of freedom of the people from hunger and malnutrition.
  • Value chain approach – focusing the policy instruments for enterprise development across successive stages of the commodity value chains for the development of crop, livestock and fisheries sub-sectors, namely input supply, production, storage, processing/utilization, marketing and consumption. Building complex linkages between value chain stages will be an important part of the ecosystem that will drive sustained prosperity for all Nigerians.
  • Prioritizing crops – focusing policy on achieving improved domestic food security and boosting export earnings requires a measure of prioritization. Therefore, for domestic crops, the initial focus in 2016 – 2018 will be expanding the production of rice, wheat, maize, soya beans and tomatoes. For export crops, the initial focus will be on cocoa, cassava, oil palm, sesame and gum Arabic. In 2018 onwards, the export focus will add on bananas, avocado, mango, fish and cashew nuts. Investments in closing infrastructure gaps to accelerate productivity and investment in these crops will also be sequenced to reflect capital availability and management attention.
  • Market orientation – focusing policy instruments on stimulating agricultural production on a sustainable basis, and stimulating supply and demand for agricultural produce by facilitating linkages between producers and off takers, while stabilizing prices or reducing price volatility for agricultural produce through market-led price stabilization mechanisms (commodity exchanges, negotiated off-take agreements, extended farm-gate price under value chains coordination mechanisms, agricultural insurance, etc.)
  • Factoring Climate change and Environmental sustainability – focusing policy instruments on the sustainability of the use of natural resources (land and soil, water and ecosystems) with the future generation in mind while increasing agricultural production, marketing and other human activities in the agricultural sector.
  • Participation and inclusiveness – focusing instruments on measures to maximize the full participation of stakeholders including farmer’s associations, cooperatives and other groups, as well as NGOs, CBOs, CSOs, development partners and the private sector. This places a premium on the role of these organizations or groups as agents of economic change in general and agricultural economy in particular, thereby drawing benefits from their policy advocacy roles as partners to and watchdog of government.
  • Policy integrity – focusing policy instruments on measures for sanitizing the business environment for agriculture, in terms of accountability, transparency and due process of law, ensuring efficient allocation and use of public funding and fighting corruption on all programmes involving public resources. This also applies to compliance with international commitments, protocols and conventions that Nigeria is a signatory to.
  • Nutrition sensitive agriculture – focusing policy instruments on addressing the issues of stunting, wasting, underweight and other manifestations of hunger and malnutrition with particular reference to the vulnerable groups, which include children under 5, nursing mothers and persons with chronic illness and disabilities.
  • Agriculture’s Linkages with Other Sectors – focusing policy instruments on the connected relationship between agriculture and other sectors at federal and state levels, particularly industry, environment, power, energy, works and water sectors.

Within this overall set of policy principles, the Federal Government will concentrate on providing an enabling environment for stakeholders at federal and state level to play their distinctive roles. The policy emphasis will be on providing a conducive legislative and agricultural knowledge framework, macro policies, security enhancing physical infrastructure and institutional mechanisms for coordination and enhancing access to adequate inputs, finance, information on innovation, agricultural services and markets.

In 2017, Nigeria recorded significant achievement in the global agricultural sector. It ranked the first in Cassava and Yam production with 59.4 million tons and 47.9 million tons respectively. It also ranked 14th in Maize production with 10.42 million tons and 4th in Palm oil with 7.7 million tons in the same year. Furthermore, in 2019, Nigeria became the largest producer of rice in Africa with a production level of nine million metric tonnes.

The Economic Impacts

The sector has remained the main sector of the Nigerian economy despite the discovery of oil in commercial quantities and its attendant boom since 1970s. A significant portion of the agricultural sector in Nigeria involves cattle herding, fishing, poultry, and lumbering, which contributed more than 2 percent to the GDP in the 1980s.

Nigeria is one of the largest countries in Africa, with a total geographical area of 923,768 square. The country has not been left out in the wake of this as there has been an increased focus on non-oil sectors of the Nigerian economy one of which is agriculture and agribusiness.

Over the past 20 years, value-added per capita in agriculture has risen by less than 1 percent annually. It is estimated that Nigeria has lost USD 10 billion in annual export opportunity from groundnut, palm oil, cocoa and cotton alone due to a continuous decline in the production of those commodities.

Nigeria’s capital importation into the agricultural sector is gaining momentum as foreign investments into the sector rose by 82 percent from $159 million (N57 billion) in 2017 to $289 million (N104 billion) in 2018, data from the National Bureau of Statistics (NBS) shows [Chart above].

The country’s over dependence on the oil sector has brought negligence to the Agricultural sector that once contributed immensely to the nation’s GDP. In 2018, agriculture contributed around 21.2 percent to Nigeria’s GDP, 25.75 percent came from industry, and 52.01 percent of the services sector [Chart above].

While the Nigerian Gross Domestic Product Report  by the Nigerian Bureau of statistics (NBS)  indicate that the sector grew by 2.28% (year-on-year) in the third quarter of 2019, an increase by 0.37% points from the corresponding period of 2018, and 0.49% points from the preceding quarter which recorded a growth rate of 1.79% [Chart above].

The GDP from agriculture in Nigeria averaged is 3904516.85 Million Naira from 2010 until 2019, reaching an all time high of 5408978.92 Million Naira in the third quarter of 2019 and a record low of 2594759.86 Million Naira in the first quarter of 2010, according to Trading Economics [Chart above].


However, the country that is highly endowed with material and human resources, agricultural growth remains below potential due to continued insurgency in the Northeast and ongoing farmer-herdsmen conflicts. The instability in the North has also resulted in the displacement of people, which has contributed to the high incidence of poverty in the North East.

Although, agriculture still remains the largest sector of the Nigerian economy, which employs two-thirds of the entire labour force, the production hurdles significantly stifled the performance of the sector.

The agricultural sector suffers from extremely low productivity, reflecting reliance on antiquated methods. Agriculture has failed to keep pace with Nigeria’s rapid population growth, so that the country, which once exported food, now imports a significant amount of food to sustain itself.

Agriculture Contributions to Nigerian Economy 2010 – 2019 (3Q) – Data

Strategic Thoughts

Higher agricultural productivity is vital for economic growth, especially in Nigeria, because of strong growth linkages and comparative advantages in trade. It can also deliver a triple dividend; sustained food security, higher human development and lower pressure on land and water.

In order to develop the Nigerian Agricultural sector investment should be focused on developing new products, tools, technologies, systems, and approaches to advance inclusive agricultural transformation.

The Nigerian economic system should support the country agricultural strategies and help drive systems innovation through the private sector, and other in-country partnerships to enable more effective delivery of products, tools, technologies, and services.

Nevertheless, the public and private sector platforms should provide multiple services to farmers in Nigeria, like self-help groups in India or producer collectives in other African countries.

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