Friday, July 10,
2020 / 10:20 AM / by FBNQuest Research / Header Image
Credit: Genetic Literacy Project
latest national accounts show that the agriculture sector grew by
2.2% y/y in Q1 2020, compared with 2.5% recorded in the previous quarter. Crop
production accounted for 88% of agriculture GDP and grew by 2.4 y/y.
We also note that the forestry and fisheries segments grew by 1.7% y/y and 1.5%
y/y respectively, but each from a low base. Over the past eight quarters, agriculture has
grown by an average of 2.1% y/y. The ongoing pandemic (Covid-19) has resulted
in supply chain disruptions, particularly across the food sector which has a
direct link with agriculture.
The temporary lockdown in some states
across Nigeria has harmed farming activities as well as the distribution of
agricultural products. Transport restrictions have impeded farmers' access to
markets, resulting in upward price adjustments of farm produce such as rice.
the past six months, there have been steady upticks in the rate of food
inflation. The latest report from the NBS shows that in May food price
inflation was 15.04% y/y. The highest increases were recorded in meat, oils and
fats, tubers, bread, cereals, potatoes, fruits and vegetables.
CBN's anchor borrowers' program (ABP), launched in 2015, has supported
increased agricultural output. The CBN has disbursed about N190bn in loans
under the ABP since its inception. Through the ABP total loans worth N432bn are
expected to be disbursed to 1.1 million farmers across the country.
combat the current economic headwinds, the CBN has rolled out stimulus measures
including a reduction in interest rates from 9% to 5% on its existing
intervention programs (ABP inclusive) over the next year.
the CBN announced plans to fund 1.6 million farmers in the 2020 wet season
across the country. This scheme falls within the ABP. The director in the CBN's
Development Finance Department disclosed that cotton farmers would also be
included. As at last month, at least 250,000 such farmers had been identified
for this initiative.
general assumption is that better access to credit would enhance the
agricultural value chain. However, farmers are urged to take loan repayments
seriously so as to give room for new debtors within this scheme in 2021.
benefited from several FGN interventions. However, there seems to be a
misalignment when we consider the investment injected into the sector and the
sluggish pace of growth exhibited. Notwithstanding, steady investment will
assist with repositioning agriculture as a backbone for the economy.
The heavy reliance on one commodity for its export earnings has resulted
in significant macroeconomic slippage for Nigeria. Agriculture provides an
opportunity for revenue diversification. According to the Nigeria Export
Promotion Council, agricultural exports have the potential to generate US$30bn
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