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19September2017

Transformation in Agriculture would booster the economic importance of North Central

Pre-independent Nigeria depended largely on Agriculture. At this time, while high populated countries like China and India were forced to import food, Nigeria’s fertile land produced enough to feed its growing population and export. The boom in agricultural activities in the 1950s led to strong accumulation in foreign reserves which partly funded the developmental projects of the independent Nigeria. The result of the developmental programmes of the 1960s saw the country’s economic base being diversified; Agriculture declining from 66% of GDP in late 1950s to 56% of GDP in 1966 while manufacturing sector doubled to 6.2% of GDP and mining revenues grew to 5% of GDP.

Nigeria’s economic growth shows a steady performance in the immediate post-independence period, with a healthy balance of payments position through exports of cash cops. Marketing boards were used to extract surpluses from the agricultural sector and the revenues used to provide basic infrastructure. There was the Western Nigeria Marketing Board for Cocoa marketing, Northern Nigeria Marketing Board for Groundnut and Cotton and the Eastern Nigeria Marketing Board for Palm Oil.

However the oil boom of the early 1970s relaxed the financial constraints to development leading the economy to grow at an average rate of 5% in the mid-1970s (using 1977/78 factor cost) ranging between a low of -1.3% in 1975/76 to 9.5% in 1979/80. Services recorded a growth rate of 17.7%, manufacturing grew 13.3% while Agriculture grew -2.3%; the beginning of its descent from national prominence.

 

Agriculture is still important

Despite its dependence on the oil industry for its budgetary revenues, Nigeria can still be classified as an agricultural society. Over 60% of the population engages in agricultural production at a subsistence level. Agriculture contributed about 40% to the Nigeria's total gross domestic product (GDP) since 2007, a decrease of about 25% from its contribution of 65.7% to the GDP in 1957. Efforts since the late 1970s to revitalize agriculture in order to make Nigeria food self-sufficient again and to increase the export of agricultural products have produced only modest results.

After a decline in agriculture growth from over 6% to 4.14% in the first quarter of 2013, the agricultural sector outperformed its growth in the last seven quarters by growing 4.52% in the second quarter on 2013, on the back of reforms and transformation in the sector. With the focus on backward integration and the outright ban on the importation of certain agricultural items into Nigeria, the sector is expected to grow very impressively and also probably increased its contribution to national output.

 

The North Central is Nigeria’s agricultural base

While all the regions in the country are agrarian and have always contributed to the growth of the sector, the dynamics have changed. The South-West is now focused more on services and commerce while the South-East focused on trade and to some extent technology. The South-South is the oil producer and has lost a significant portion of its arable lands to oil spillage while the insurgencies in the core northern regions (North West and North East) would affect agricultural production. The North Central, hitherto referred to as the middle-belt appears to be the main beneficiary of the developments in the agricultural sector. With supportive policies for local food production and exports, the region could drive a strong alternative foreign exchange earnings and increase in national revenue.

 

Local support needed

As good as the transformation agenda in agriculture might, its success will require the support of state and local governments in the regions. The federal government should co-opt the lower tier governments into the programme and rely on their closeness to and knowledge of the grassroots for impact. The programme should be research-based and coordinated centrally while monitoring should be left for the state and local governments, supported by federally funded agricultural extension workers. Agriculture, if properly managed could growth by up to 10% with implications for economic growth.

  • Written by The Analyst
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Like with agriculture, the focus on the development of the solid mineral sector wanes upon the discovery of oil


Prior to the advent of oil and the subsequent affliction of Dutch Disease of mono-product dependence by Nigeria, solid minerals sector was one of Nigeria’s key sectors, contributing quite significantly to the economy. Until the 1960s, coal and tin were mined in places like Jos and exported on a large scale. Poor management by state-owned enterprises however led to a decline in existing operations. Today, the solid mineral sector contributes less than 0.5% to national output, from a peak of about 2.7% in the 1970s.

Major solid minerals that Nigeria has in commercial quantities include Talc, Gypsum, Iron Ore, Bitumen, and Coal. The geological map of the country developed between 2003 and 2007 identified specific areas and location across the country where these minerals are concentrated in commercial quantities. The activities in many of them including Gold have however been largely artisanal and crude. The principal legislation regulating mining activities in Nigeria is the Nigerian Minerals and Mining Act, 2007 as amended. The sector is one of the most under-reported in Nigeria despite the huge potential for supportive economic activities locally and exports.

Expectedly, public sector dominance of the solid mineral sector portends its greatest challenges

The primary challenges to the growth of the solid minerals sector include the unwieldy public dominance of the sector backed by the erstwhile Solid Mineral Act that rendered mining activities the exclusive purview of government and private ventures illegal. In addition, given that modernised commercial mining activities require huge investment outlays, the sector has remained unattractive in the light of the unclear regulatory environment. In effect, activities have been dominated by artisans employing crude methods and illegal small scale operators. Hence, there remains a dearth of mining and solid mineral exploration skills in the country.

The President Obasanjo Administration committed N2 billion toward a solid minerals deposit survey. The survey was an integral component of a 7-year action plan as enunciated in a Presidential Committee Report on Solid Minerals Development submitted to the government in 2002. The survey aimed to assess the commercial viability or otherwise of proven deposits. It also formed a major plank in the formulation of the new national Solid Minerals Development policy which aims to push accelerated and orderly exploration and exploitation of the country’s known deposits through private sector leadership. Currently, about 56% of the Nigerian land mass including the Niger Delta has been covered by high resolution airborne magnetic and radiometric surveys under this project. The British Geological Survey (BGS) has also assisted Nigeria in the geochemical survey of some parts of Nigeria.

In 2007, the government also set in motion the Sustainable Management of Mineral Resources Project in partnership with the World Bank. The project led to the development of a new legal and regulatory framework- the Mineral and Mining Act 2007, which legally refocused the solid mineral industry for private sector investment. The efficient and transparent grant and management of mining titles in line with international best practices also evolved supported by public sector expertise and infrastructure. This includes the Geological Information Gathering (GIG) for investment and national planning infrastructure. A structure benefitting the mining communities was also put in place, in addition to the introduction of the import substitution policy for selected solid minerals to protect investments in these areas.

But government needs only to provide an enabling environment including necessary infrastructure to attract private investment to the sector

The government reforms and policy thrust thus far appear appropriate, at least theoretically. But, there is still more to be done by the government to attract foreign and private direct investment into the sector. Considering that the average size of investment required in the sector is huge, all elements of risk must be duly addressed by the government and incentives provided where necessary. The dearth of infrastructure especially transportation and power may discourage private investment in the sector. It is imperative that there is suitable road and rail transportation to the hinterlands where substantial deposits of these minerals are located.

Other incentives such as taxes and import protection would also provide additional support for private investment.

  • Written by The Analyst
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