Recently, the Nigeria Export Promotion Council (NEPC) disclosed that the FG has identified about 22 non-oil strategic products that will be exported to diversify the nation’s foreign exchange earnings away from oil. According to the Executive Director, NEPC, Olusegun Awolowo, this initiative is part of the zero-oil plan currently being implemented by the Nigeria Export Promotion Council (NEPC), in collaboration with the private sector, and is
estimated to be worth over US$150bn in annual export value at full capacity. Some of the targeted products include; palm oil, cashew, cocoa, soya beans, rubber, rice, petrochemical, leather, ginger, cotton and Shea butter, tomato, banana and plantain.
We regard this initiative as a welcome development given the recent impact of the downturn in oil prices on government revenue and foreign exchange earnings of the country. However, we note that the realisation of the objective would be highly dependent on the extent to which productivity in the agricultural sector can be improved upon to satisfy domestic consumption and boost exports. We note that the CBN, in recent years through initiatives such as the Anchor Borrowers Program (ABP), Commercial Agricultural Credit Scheme (CACS) has played an active role in providing affordable finance to improve the productivity of the agricultural sector.
Furthermore, the CBN has also complemented its efforts with the use of administrative controls to strengthen local production by placing a ban on access to FX for importers of many of the agricultural products identified by NEPC. Despite the actions of the CBN, growth in the sector is yet to show a remarkable improvement. Based on data obtained from National Bureau of statistics, the agriculture sector grew by an average of 3.2% between 2015 and 2019 which pales in comparison to the prior 5 years (2010 -2014) and 10 years (2005 – 2014), when the sector grew by 4.5% and 5.7% respectively.
Without downplaying the role of affordable finance in incentivizing local farmers and boosting local production, we believe poor farming practices and inadequate agriculture infrastructure remains a huge constraint on productivity. Majority of local farmers cultivate on small lands, adopt crude implements and methods and are heavily reliant on rain to grow their crops. These have resulted in lower yields on farmlands. In addition, lack of storage & agro-processing facilities and decrepit road infrastructure which hampers route-to-market have contributed to post-harvest losses. We recall the last published Agriculture Promotion Document by former Minister of Agriculture, Audu Ogbeh puts harvest loss rates of perishable crops at 60%.
Boosting agricultural productivity requires increased investment in research and development on plant breeding and crop planting, provision of fertilizers and irrigation facilities, agglomeration of smallholder farmers into larger groups and enhancing infrastructure (Storage & Transportation) to reduce post-harvest losses. It becomes even
more important to focus on implementing these measures in order to improve agriculture as the African Continental Free Trade Agreement (AfCFTA) presents a significant opportunity for the nation to improve export of agricultural produce.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.