Nigeria’s way out of economic meltdown
Nigeria’s current difficult economic situation has been appropriately attributed to several factors, including falling oil prices and cut in oil production. The lack of fiscal buffers, structural constraints, and fuel, electricity, and foreign exchange scarcities have further compounded these difficulties being experienced by Nigerians.
There, of course, are no easy short-cuts for leaders to deal with the economic challenges but the people need a break from hardship.
As said before, Nigeria’s huge agricultural potential is not in doubt and tapping such for the country’s development is the right thing to do.
The country is well endowed with rich and abundant natural resources for lifting millions of people out of poverty and hunger, and generating foreign exchange earnings through agricultural exports. The country’s arable land is estimated at 84 million hectares, although only 40 per cent is cultivated and water resources of 230 billion cubic metres.
The challenge is in turning this huge potential into prosperity for the vast majority of Nigerians. At independence and for the most part of the decade of 1960s, Nigeria was the world’s largest producer of groundnuts and palm oil, the second largest exporter of cocoa, and was also self-sufficient in food production. Agriculture contributed significantly to Gross Domestic Product, foreign exchange earnings, employment of the labour and regional economic development across the country. The introduction of Agricultural Transformation Agenda (ATA) between 2011 and 2014 sought to bring about major transformation to the sector through reforms in input delivery, agricultural financing, value chain development, and farm mechanisation. The ATA achieved some positive results. Between 2011 and 2014, national food production grew by 21 million MT, food import bill fell from N3.2 trillion in 2011 to N635 billion in 2013, and direct farm jobs rose by 3.56 million in the period 2012 to 2014.
It is against this background that President Muhammadu Buhari’s administration launched the Agricultural Promotion Policy (APP) Roadmap last year. The APP Roadmap aims at building on the achievements of the ATA, while tackling two key gaps in Nigeria’s agriculture. First, agriculture currently does not meet domestic food requirements, thereby draining foreign exchange with food imports, due to an unproductive farming model and inefficient input system with an aging population of farmers that lack adequate access to seeds, fertilizers, irrigation, crop protection and related support. The second challenge relates to an inability to export agriculture produce at quality levels required for market success to earn foreign exchange due to insufficient food testing facilities, a weak inspectorate system, poor coordination among relevant agencies and poor knowledge of target markets.
Once again, this newspaper urges that emphasis on market-orientation and commercialisation must not be to the detriment of rural poor farmers and local communities. De-risking the value chains must focus on both commercial and rural poor and subsistence farmers. Rural poor farmers must also have access to technologies, financial services, inputs supply chains, and market linkages that will enhance their productivity. Inclusiveness should ensure the full participation of stakeholders including farmers’ associations, cooperatives and other groups.
That the industrial sector is the hardest hit by the ongoing foreign exchange squeeze and epileptic power supply plaguing the country is not in doubt. Most industrial plants have been forced to close shop. Many multinational firms have relocated to neighbouring countries where better prospects exist for manufacturing and the few remaining firms are finding it extremely difficult to remain in business.
Of course, it is more desirable to produce more and be export-oriented, that is not the case at present in Nigeria as there is more of importation of virtually every conceivable item, including raw materials. To change the situation would require strategic and serious economic re-engineering of Nigeria through good policies.
Enhanced productivity is one viable option of rescuing the economy and productivity, in this case, means massive industrial manufacturing and agricultural production.
Unfortunately, the machinery and raw materials input needed for such productivity to take place have been hampered by the current devaluation regime.
While this dilemma faced by the manufacturing industries calls for re-assessment, it must be emphasised that given the right push by way of policy direction, Nigeria should be able to produce some of the raw materials needed for industrial production.
It is a shame that local production of palm oil is put at meagre 600 metric tonnes annually, while the total demand is about 1.8 million metric tonnes, with a shortfall of 1.2 million metric tonnes and the restriction on oil palm products alone has reportedly led to the loss of over 100,000 jobs in related industries. So, millions of people could be employed in the oil palm-related industry alone!
Such failure is not limited to palm produce alone. There is practically no mineral resource that is not found in Nigeria. Putting the right framework in place to exploit them is the issue and the Federal Government should allow states to harness the mineral resources in their domain.
At times like this, a nation has to be innovative and bold.