Why Nigeria must increase funding to the agricultural sector
In the last few years, the Nigerian agricultural sector has not received adequate funding to catalyze a transformative growth in the sector. Recently, the amount to the sector as a percentage of the total budget revolves around 2 percent and less. Meanwhile, it has been widely noted that public spending in the agricultural sector is a recipe for growth and development of the sector and critical to achieving the objective of food security and job creation in the country. This article is centering on the 2019 budget for the Agricultural sector and making a case for increased investment for the sector.
The 2019 budget proposal of 8.8 trillionNaira was presented to the joint session of the National Assembly on December 19, 2018with the allocation of 137.9 billionNaira to the Federal Ministry of Agriculture and Rural Development (FMARD) and 46 other MDAs under her. This amount allocated to the agricultural sector is approximately 1.6 percent of the total budget. It is against this background that I argue that the public spending in the agricultural sector is low and should be increased. It has been severally stated that the agricultural sector is the key driver of the Nigerian economy contributing between 22% to 26% to GDP and employing over 40% of the population and almost 90% in rural area. Most importantly, fresh demands have been placed on agriculture as part of the government’s vision of diversifying the economy away from oil.
For a sector with such humongous responsibilities, there is the need for adequate resource allocation for the achievement of her objectives. Firstly, the entire budget process has become a yearly ritual that follows the same pattern with little consideration for the recommendations of stakeholders on improvement. For example, the presentation of the budget proposal was very late in the year when official activities were winding down and the general elections became the priority of members of the National Assembly. Since the elections has come and gone, members of the National Assembly should expedite action in passing the budget in view of the fact that some capital appropriations will affect farmers as the raining season is setting in. It must be noted that the late passage of the budget has its negative toll on the implementation of the capital projects. Going forward, it would be good if the Budget office of the federation can start the budget process of a succeeding year at the beginning of the preceding year. For example, the budget process for 2020 should begin now.
Looking at the allocation to the agricultural sector, the amount 137.9 billion Naira (1.6%) percent falls short of the CAADP benchmark. You would recall that in 2014 at Malabo, African Heads of State signed to commit at least 10 percent of their national budget to the agricultural sector. Unfortunately, Nigeria has been trailing with regards to fulfilling this commitment. For the past 5 years or more, the budget to the agricultural sector have not exceeded 2 percent. Empirical evidences have shown that the greater the resources committed, the greater the output. This implies that huge investment results to huge outputs. Nevertheless, recent emphasis is on the quality of investments rather than the quantity of investment as well as how the investment will affect the targeted beneficiaries.
In the 2019 Agriculture budget, the capital expenditure 80.3 billion equals to 58% of the budget while the recurrent expenditure 57.7 billion is 42%. In as much as this looks like a plus as capital is higher than recurrent, and based on the assumption that more capital spending translates to higher contribution to the economy in terms of jobs and product output, most of the capital line items are ongoing projects related surfacing of some kilometers of roads and the development of various crop value chain. However, some of the line items will need further explanation for citizens to understand. For example, the line item ERGP30105281, titled Green Alternative Implementation which is an ongoing project of 155,182,587 Naira will need further explanation and rationality for the amount. This is because the Green Alternative is the same as the Agricultural Promotion Policy (APP), which is being implemented and every activity in the sector is geared towards achieving the APP, so what is the rationale for spending funds to implement the APP except if it has a different meaning.
Also, it was noted that some capital project appropriated for do not have stated locations to expedite transparency and effective monitoring and evaluation. It is important that Irrigation, dam and water projects in the budget must have location. For instance, about 8 billion Naira is budgeted for Rural roads and Water Sanitation (ERGP5105180), however, there was no further information regarding the locations and length of road that would be constructed with the fund.
Another important thing to note is that out of the 137.9 billion, about 64.1 billion (46%) is allocated for the main Ministry headquarters in Abuja while the over 40 agencies under her, including the 3 Universities of Agriculture shares 73.8 billion (54%). Although the ratio has improved compared to what it used to, many stakeholders still think that the implementing agencies still need more funds owing the fact that the Ministry headquarters roles is fundamentally regulatory and supervision. Meanwhile, it appears that the other MDAs have not learnt to create quality capital projects, a careful perusal of some of the line items of the MDAs under the Ministry of Agriculture shows high level of repetition of projects proposed in previous years. We expect that research institutions should have innovative proposals on developing new varieties and transferring current technologies to farmers. It would be important for the Civil Society searchlight to shine on them too.
Looking back over the years, budget performance has been very poor especially in the release of funds to carry out implementation, only about 20% of the capital budget is being release and almost 100% of recurrent expenditure is used. This means that the salaries and emoluments paid to staff does not match their outputs. It is like having a fully equipped factory that produces at 20% capacity, obviously running at a loss but the manager still finds a way to pay everyone their salaries. This is not a sustainable way to run a system, one day the system will definitely collapse.
By and large, I think the budget document has tremendously transformed in terms of quality with less frivolous items and repetitions. What will matter for us now for the National Assembly to expedite action and pass the budget on time so that implementation can commence. Stakeholders will also want to see and improved budget performance in 2019.
Aguiyi is Associate Program Officer-Alliance for a Green Revolution in Africa
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