Weak Agric Sector Growth Questions Anchor Borrowers’ Spending
The declining agriculture (Agric) sector’s contribution to the gross domestic product ratio has continued to put pressure on market prices of foods, raising questions about Nigeria’s anchor borrower spending. The agriculture sector’s contribution to Nigeria’s economy was down to 21.07% in the second quarter of 2023, from 21.90% in the comparable period amidst high Anchor Borrowers Programme spending.
In March, MarketForces Africa reported that the apex bank announced it has disbursed N1.09 trillion to farmers under its anchor borrowers programme. >>>Anchor Borrowers Programme: CBN Disburses N1.09trn to Farmers Unfortunately, the amount spent has not translated to food sufficiency and prices have worsened past the level seen when Nigeria’s borders were open.
Still, the private sector has not thrived, which is one of the reasons why the government closed its border without putting in place relevant infrastructure in a country that lacks comparative cost advantage. Out of about N1.1 trillion disbursed by the Central Bank of Nigeria (CBN) to local farmers since its inception, only a little above N546 billion has been repaid while a whopping balance of N577 billion remains unaccounted for.
In August 2019 after former President Muhammadu Buhari locked borders against foreign products through land borders, prices of goods have been uptrend. Since then, the inflation rate in Nigeria has continued to worsen, and it is majorly supported by food inflation.
MarketForces Africa gathered that some farmers in the Northern states claimed their farmlands were affected by floods while others hid behind criminal activities and insurgency to avoid repayment. Nigerian government claimed it closed borders to support local production.
Unfortunately, the Russia-Ukraine war started while the country was grappling to maintain food sufficiency, and the disruptions in grains and other goods from the two countries into the global market affected all African countries.
Recent agriculture performance has been unimpressive despite government spending in the sector – with more than N1 trillion uncollected from funds provided to farmers – majorly in the Northern area.
However, growth peaked in the third quarter of 2022, according to official data, as crop production was valued at N13.241 trillion versus N9.669 trillion at the end of the second quarter of 2023.
In the fourth quarter of 2022, the value of cross-production in Nigeria was N12.651 trillion. It fell to N8.736 trillion in the first quarter of 2023. Also, livestock recovered to about N663 billion in the second quarter of 2023, from N504.675 billion in the first quarter of the same year.
In the fourth quarter of 2022, Nigeria’s livestock production was valued at about N745 billion, which was an improvement against N630 billion reported in the third quarter of 2022. In the fishing sub sector, there was a rebound in the second quarter of 2023.
Statistics office figures showed that the fishing economy was worth N540 billion in the second quarter of 2023, which was a slowdown when compared with N633 billion reported in the fourth quarter of 2022.
However, the figure was an improvement from N440 billion in the fishing sub-economy reported in the third quarter of 2022. MarketForces Africa Research gathered from key market players that weak agricultural sector output would continue to impact food prices in 2023.
The key issue remains funding and logistics given high interest rates that discourages private sector business expansion and logistics costs impact on retail market prices.
In its latest gross domestic product report, the National Bureau of Statistics (NBS) said the Agriculture sector grew by 11.42% year-on-year in nominal terms in the second quarter of 2023. This figure, according to the statistics office, showed there was a decrease of 2.41% points in agriculture sector performance when compared to the same quarter of 2022.
Looking at the preceding quarter’s growth rate of 5.24%, the NBS said, the figure means there was an increase of 6.19% points in the sector. A review of the GDP report showed that crop production remained the major driver of the sector, accounting for 88.06% of the overall nominal value of the sector in the second quarter of 2023.
Quarter-on-quarter, Agriculture sector growth stood at 9.15% in the second quarter of 2023 and contributed 21.07% to nominal GDP in the same period. NBS said this figure was lower than the rate recorded in the second quarter of 2022 and higher than the first quarter of 2023 which recorded 21.90% and 19.63% respectively.
The sector grew by 11.42% year-on-year in nominal terms in Q2-2023, showing a decrease of 2.41% points from the same quarter of 2022. Compared with a growth rate of 5.24% in the first quarter of the year, the statistics office said there was an increase of 6.19% points.
Crop production remained the major driver of the sector. Data review showed crop production accounts for 88.06% of the overall nominal value of the sector in the second quarter of 2023.
It grew by 9.15% in the second quarter of 2023. Overall, agriculture contributed 21.07% to nominal GDP in the second quarter of 2023. NBS said the figure was lower than the rate recorded in the second quarter of 2022 and higher than the first quarter of 2023 which recorded 21.90% and 19.63% respectively. #Weak Agric Sector Growth Questions Anchor Borrowers Spending