Overview of Nigeria’s Agribusiness
To maintain its share of the continent’s agriculture GDP by 2030, Nigeria will need to grow its agriculture sector revenues by a compounded annual growth rate (CAGR) of 4.7% annually. To ensure this is achieved, agriculture budget to GDP will have to be sustained by at least 7% annually. It is estimated that agriculture is Africa’s largest economic sector, representing 15% of the continent’s total GDP . Nigeria contributes 14% of Africa’s agriculture GDP . The World Bank forecasts that by 2030, the food market in Africa will grow to be a US$1 trillion industry. Nigeria will need to intensify its investments in improving agriculture yield and integrating the value-chain over the next decade to effectively capture a significant share of the US$1 trillion market.
According to the Alliance for a Green Revolution in Africa (AGRA), Africa continent would require over US$300 billion of public and private investments across the agriculture value-chain over the next decade.
The top 10 African countries (including Nigeria) produce 75% of Africa’s farm produce. In addition, Ethiopia, Kenya and Nigeria are the top three Africa countries with the highest GDP contribution from Agriculture in 2017. Despite this, statistics from the World Bank indicates that average agriculture contribution to GDP declined from 20% in 2009 to 16% in 2017 in sub-Saharan Africa. According to African Development Bank (AfDB), the continent’s 2017 food import bill of US$35 billion is estimated to rise to US$110 billion by 2025. Overall, the continent accounts for 60% of the world’s global uncultivated arable land estimated at 600 million hectares.
Nigeria’s agriculture contribution to GDP makes it the largest sector in the country. Crop production accounts for a huge chunk of activities in the sector representing 88% of total industry size with livestock, forestry and fishing accounting for the balance of 12%. The sector achieved GDP of US$113.64 billion in 2014, the highest in the last five years (2013 – 2017). Since then, the sector’s contribution has been declining due to low agriculture yields, conflicts such as terrorism and the herdsmen crisis, as well as the impact of climate change. Agriculture contribution to Nigeria’s GDP dropped by 31% from US$113.64 billion in 2013 to US$78.45 billion in 2017.
Food import bill in 2017 was US$4.5 billion representing a 12.2% increase from the 2016 bill of US$4.01 billion. However, Q2 2018 bill of US$0.97 billion shows a decline of 31% over Q1 2018 import bill of US$1.4 billion. Though Q2 2018 bill of US$0.97 billion reflected a decline of 31% over Q1 2018 bill of US$1.4 billion, when compared to Q2 2017 of US$0.48 billion, it was a significant increase of 102%.
Nigeria is the largest rice producing country in West Africa. In addition, the country grows about 50% of grain crops produced in West Africa. Nigeria is the 3rd largest millet producing country in the world after India and China. Also, the country is the world largest producer of cassava and yam; the 2nd world largest producer of sweet potatoes and the 4th world largest producer of groundnut and cocoa. Nigeria has over 84 million hectares of arable land, of which only about 40% is cultivated; 230 billion cubic metres of water; abundant and reliable rainfall in over two-thirds of its territory, and some of the richest natural resources for agricultural production in the world.
The ratio of Nigeria’s budget for agriculture to annual budget falls short of the prescribed standard set by the Maputo Declaration on Agriculture and Food Security (“The declaration”). Through the declaration, the African Union (AU) agreed to allocate at least 10% of its member countries annual national budget to agriculture.
Budgetary allocation for agriculture of N0.20 trillion accounts for 2.2% of the proposed 2018 budget of N9.12 trillion. In 2017, agriculture budget of N0.10 trillion represented 1.3% of total budget of N7.44 trillion