In the last three decades, the Nigerian government has implemented numerous policies and projects with the objective of revitalising the agricultural sector and reinstating its prominent position in the economy. Nevertheless, despite the implementation of several initiatives aimed at stimulating investment and fostering diversification in the agricultural sector, the anticipated benefits have not been significantly realised. The agriculture sector possesses significant untapped potential for creating higher economic growth through substantial investments and diversification of exports. However, this potential has not been fully realised due to various restricting constraints that need to be addressed. Hence, this study has highlighted the limitations and proposed policy recommendations that should be applied in order to eliminate these restraints and expedite the achievement of poverty reduction and quick economic growth inside the nation.
The development of the agricultural sector in Nigeria is widely seen as a crucial economic approach to address poverty, provide food security, improve the overall quality of life, and provide sustained economic growth. Agricultural growth is often regarded as a crucial factor in fostering economic progress in numerous Sub Saharan nations, Nigeria being among them. Nigeria’s economy is comprised of multiple sectors that collectively contribute to its overall production. In practical application, these industries are categorised into four primary divisions, specifically agricultural, manufacturing, oil/petroleum, and services. The agricultural sector can be further divided into distinct categories, including crop production, animal farming, forestry, and fisheries. Based on historical data, it can be observed that agriculture consistently maintained its position as the primary driver of the Gross Domestic Product (GDP), accounting for an average of 40.1 percent over the entirety of the analysed period. The agricultural industry was closely followed by the services sector, which together contributed 38.1% to the overall economy. Within the services sector, the private services sub-sector accounted for around 29.0% of this contribution. The aforementioned suggests that agriculture holds a crucial role in fostering economic development in Nigeria. Therefore, a substantial portion of efforts aimed at revitalising the economy and effectively mitigating poverty should be directed towards the meaningful revitalization of the agricultural sector.
Historically, the economy has experienced expansion primarily due to agricultural activity and foreign trade. During the period preceding Nigeria’s independence, the Nigerian government successfully implemented investment initiatives by utilising the revenue generated from the exportation of agricultural products. During the 1940s and 1950s, the agricultural export commodities of Nigeria played a significant role, accounting for more than 75 percent of the overall yearly goods exports (Ekpo and Egwaikhide, 1994; Oyejide, 1998; Okoruwa et al., 2003). During this specific time frame, agricultural items held a prominent position in Nigeria’s non-oil export sector, constituting around 70 percent of the total value of non-oil exports. Agricultural commodities, including cocoa, rubber, cotton, palm oil, palm kernel, groundnut, and coffee, have significantly contributed to economic development through the provision of foreign exchange required for capital development initiatives. During the colonial period, the agricultural export items formed the primary trading basket for exports. Despite significant government initiatives aimed at revitalising the agricultural sector’s pivotal role in supplying food for human consumption, meeting industrial demands for raw materials, generating foreign exchange, and providing employment opportunities, the agro-allied industry in the country has experienced a decline in capacity utilisation. This decline can be attributed, at least in part, to the irregular and insufficient supply of raw materials. The connection between the agricultural sector and the industrial has exhibited a significant lack of strength. Ensuring a balance between the raw material demands of industries, human consumption requirements, and the agricultural sector’s capacity to provide these raw materials is of utmost importance for the nation. Agricultural products are widely acknowledged for their dual significance in domestic food supply and industrial applications, as well as their substantial potential for exportation. These products play a crucial role in ensuring food security for the entire population and generating money for farmers, as well as various economic stakeholders engaged in the marketing of agricultural goods. They function as a significant supplier of raw materials for many industries, while also serving as a primary generator of foreign exchange earnings for the nation, apart from oil-related sources. There exists considerable potential for expansion in the agriculture sector that can be effectively harnessed.
The identification of development limitations within the agricultural sector is an essential prerequisite for addressing the reasons that impede the industry’s performance. This process is crucial in formulating policy measures that can foster a favourable environment for supporting quicker commercialization and expansion within the sector. In relation to this matter, the subsequent aspects hold significant importance. The process of marketing include the facilitation of agricultural product distribution from producers to consumers. One potential strategy for increasing production is to stimulate consumption, promote the expansion of the agro-industry, and facilitate industrial growth. In order for marketing to assume a pivotal role in augmenting agricultural production, it is imperative to consider the incorporation of the following crucial components.
Transportation plays a crucial role in facilitating the movement of products from their production sites to their consumption destinations. The establishment of an effective network of roads is of utmost importance. The condition of the bulk of rural roads in Nigeria is highly lamentable. The implementation of a secure and effective storage system is crucial in maintaining a consistent and uninterrupted flow of agricultural goods within the market. The current approach exhibits significant deficiencies and lacks efficacy. The provision of financial resources for marketing purposes in order to provide timely remuneration to farmers upon the delivery of their goods for sale. The processing system serves as a catalyst for agricultural development by providing a sustained and uninterrupted avenue for farmers to engage in long-term production activities. The marketing system necessitates the presence of a functional and dynamic information system that establishes a connection between buyers and sellers. Unfortunately, the current level of market information development in the country remains rudimentary. The utilisation of advanced storage systems, which have been established by reputable research institutes, has not been widely implemented or even acknowledged by farmers. Significant post-harvest losses are attributed to insufficient storage infrastructure, particularly during periods of abundant harvests.
The disparity between national food security and household food security can be attributed to the insufficiency of storage and processing facilities. While the overall food output may appear sufficient, achieving substantial enhancements in food security necessitates ensuring that food is accessible for consumption in the appropriate timing and shape. While the consumption of food is a daily necessity, the production of food follows a distinct temporal pattern. The proper storage and processing of commodities are essential in guaranteeing their availability for consumption at any given time and location. A considerable amount of products obtained during harvesting in Nigeria undergoes spoilage as a result of inadequate storage and processing infrastructure. The country’s development of storage technologies for perishables, including roots, tubers, fruits, and vegetables, is comparatively less advanced than that of storage technologies for cereal grains and legumes in terms of simplicity, efficiency, and cost-effectiveness. As a result, there is a significant prevalence of post-harvest food storage losses, with perishable items experiencing a considerably higher rate of roughly 40 percent, in contrast to cereal grains and pulses which exhibit losses of approximately 15 percent. In this context, infrastructure encompasses various components, including physical infrastructure like roads and train systems, educational and health facilities, social services such as access to clean water and electricity, and communication systems. The inadequate state of infrastructure development significantly hampers agricultural performance in Nigeria. Insufficient infrastructure in rural areas, where the bulk of smallholders operate, is a significant obstacle to agricultural investment, output, and trade. In numerous regions around the nation, there exists a deficiency in the development of physical and marketing infrastructure, resulting in inadequate storage facilities and limited access to information and marketplaces. The aforementioned scenario exemplifies the presence of an urban bias within the country’s development pattern. The insufficiency of infrastructure is reflected in the limited accessibility to markets, resulting in a constrained availability of agricultural products in numerous regions and a consequent decrease in farmers’ revenue. The persistence of the Infrastructure constraint can be attributed to factors such as government neglect, inadequate governance, ineffective political leadership, substandard maintenance practises, and insufficient money. The sustainability of road networks in rural areas, where the majority of agricultural activities occur, has not been effectively maintained by various organisations such as the Agricultural Development Programmes, the Directorate of Foods, Roads and Rural Infrastructure, the National Agricultural Land Development Authority, and the Petroleum Trust Fund. Furthermore, the railway system, which was anticipated to alleviate the situation, has been inactive for an extended period, resulting in limitations on the transportation of agricultural inputs and outputs to the road transport system. The durability of constructed roads is sometimes limited to a span of three to five years, as they begin to deteriorate mostly as a result of inadequate maintenance practises. In terms of educational and health infrastructure, there is a significant bias towards urban areas.
The utilisation of acreage in the traditional farming system is influenced by the availability of workers. Given the limited mechanisation of agriculture in Nigeria, human labour assumes a critical role in all aspects of production systems, encompassing around 90 percent of all farm operations. According to a study conducted by the National Institute of Social and Economic Research in 2001, in semi-mechanized systems that involve animal traction, human labour accounts for up to 70 percent of all activities. While agriculture is predominantly reliant on manual labour, producers commonly face seasonal labour shortages. The workforce supply is influenced by continuous migration of physically capable young individuals from rural to urban regions, resulting in manpower shortages, particularly at peak periods when labour is needed for tasks such as land preparation, weeding, and harvesting. The scarcity of hired work has resulted in an increase in labour costs, rendering such labour economically unviable for the typical small-scale farmer. The migration problem has been further aggravated by the inadequate agricultural output of smallholder farmers and the belief held by young adults in farming households that the farm is incapable of sustaining their livelihoods (Chemonics, 2003).
Previous initiatives aimed at enhancing agricultural productivity in Nigeria, such as Operation Feed the Nation and the Green Revolution programme, as well as other notable interventions in the agricultural sector, primarily focused on increasing production. However, these efforts did not adequately address the need for post-harvest management and industrial utilisation. The majority of individuals involved in the post-harvest system dealt with different components, including processing, packaging, marketing, storage, distribution, and transportation, without integrating them together. The system’s administration lacked a broad and holistic approach. Moreover, the insufficiency of the relationship between the agricultural and industrial sectors poses limitations on the industrial utilisation of agricultural commodities. Each initiative was implemented in a haphazard manner, resulting in the exacerbation of issues rather than the attainment of the intended objectives. Despite the fact that many programmes have led to seasonal increases in agricultural output, significant agricultural wastage, food losses, reduced availability of food, limited distribution throughout the year, and decreased employment and rural income persist due to inefficient and ineffective post-harvest management and generally low levels of industrial utilisation.
PROSPECTS OF ATTRACTING INVESTMENTS
Investors consistently demonstrate a willingness to allocate their capital towards firms that exhibit strong appeal. The agricultural strategy implemented in Nigeria has effectively identified seven specific sectors for investment. The activities encompassed within this framework include agricultural production, which encompasses crops, livestock, fisheries, and agroforestry. Additionally, it involves the provision of infrastructure specific to agricultural enterprises, storage, processing, and marketing of agricultural produce, supply and distribution of agricultural inputs, support for agricultural research, provision of agricultural implements hiring service, and collaboration with state and local government entities, as well as farmers, in the implementation of the research-extension-farmer-input/marketing-linkage system (REFILS) at the state level. In their study, Manyong et al. (2003) identified thirteen investment choices, which encompassed several sectors such as input production and supply enterprises, staple food crops production enterprise, industrial crops production enterprises, animal production enterprises, fisheries, forestry, and commodity processing and storage enterprises. Additional sectors within the realm of agriculture include agricultural commodity marketing, agro-industry or manufacturing, agricultural commodity export, and agricultural support services. According to Manyong et al. (2003), the perceptions of various stakeholders indicate that foreign investors are more likely to be drawn to capital-intensive activities and firms that enhance the value of primary products. It is important to acknowledge that the significant influx of rice imports and the periodic scarcity of maize, sorghum, and millet serve as indicators of insufficient grain output. Furthermore, there is a growing need to enhance the cultivation of various crops, as emphasised by the presidential efforts aimed at boosting the production and exportation of cassava, vegetable oil, tree crops, and cotton. The agricultural industry continues to offer significant prospects for private sector endeavours in crop production.
A significant amount of the agricultural gear utilised in Nigeria continues to be sourced from other countries. Nwosu (2004) asserts that the presence of tractor-assembly plants in Nigeria is limited to two establishments, namely Steyer located in Bauchi and Fiat situated in Kano. The aggregate yearly production of the two corporations amounts to fewer than 2000 tractors. However, there exist certain privately-owned businesses that engage in the production of agricultural equipment. One of the primary challenges encountered by these institutions is the insufficiency of financial resources. There is a desire for private sector investment in the development and commercialization of suitable agricultural machinery and equipment for various farm operations, including processing, storage, and other related activities. In this context, it is imperative for the business sector to allocate resources towards the commercialization of prototypes for enhanced mechanical and other technologies that have been produced inside various research institutes. These prototypes currently remain underutilised, confined to the shelves of researchers. The significant contribution of Holt Engineering in the production and dissemination of agricultural implements, including disc harrows, riggers, and ploughs, is widely recognised. The production and selling of agricultural machinery, tools, and equipment is characterised by a high level of capital investment and offers lucrative prospects for private sector enterprises. The existing processing facilities for export commodities, including cocoa, rubber, palm kernels, cotton, groundnuts, tobacco, and lumber, are insufficient. Moreover, there is a scarcity of processing facilities dedicated to handling highly perishable fruits and vegetables. The Chi Group, a fruit juice manufacturer based in Lagos, has effectively implemented a comprehensive system that combines in-house farming, contract out-grower arrangements, and processing. The current prohibition on the importation of fruit juices is expected to create favourable conditions for increased investment opportunities within the private sector. Moreover, there exists a substantial and escalating demand for processed agricultural commodities within the Nigerian market and the Economic Community of West African States (ECOWAS) sub-region. There is an increasing demand in international markets for diverse Nigerian cuisines, driven by the substantial population of Nigerians residing in Europe and the USA, as well as by other West Africans and African Americans. The private sector should take advantage of the opportunities presented by food processing, marketing, and commerce. The exploration of the potentialities offered by the African Growth and Opportunity Act (AGOA) of the United States of America is warranted.
THE WAY FORWARD
It is imperative for the government to allocate substantial resources towards the enhancement of rural infrastructure, with the aim of fostering private investment across various agricultural sectors and facilitating the integration of agriculture with industry. There is a need for the intensification of the rural electrification plan in order to ensure comprehensive coverage of all rural communities inside the country. The government should continue its efforts to establish and maintain a stable macroeconomic environment, primarily characterised by the preservation of price stability. In order to foster domestic and foreign investment in the sector, it is imperative for the government to prioritise the provision of protection for both life and property on the social front. Enhance agricultural productivity, processing, and commerce by facilitating expanded resource accessibility, including land, advanced technologies, enhanced inputs, credit, and training. The facilitation of adoption of contemporary farming and husbandry practises, such as the utilisation of enhanced seeds and seedlings, the application of agricultural chemicals for the purpose of pest and disease management, and the implementation of tractors to alleviate laborious tasks and increase agricultural productivity, should be supported through the provision of assistance to farmers in acquiring improved technologies. The promotion and enhancement of small-scale irrigation across all agro-ecological zones inside the country is vital. The allocation of additional financial resources to the agricultural sector with the aim of enhancing the operational effectiveness of institutional entities involved in agricultural development. Efforts should be made to streamline the functions of the agencies in order to optimise the allocation of resources towards their main responsibilities. The expansion of investment in the agricultural sector and subsequent commercialization of products is anticipated to present a heightened risk of environmental harm. This may manifest in various ways, including land degradation, pollution of ecosystems due to the discharge of processed agricultural commodities, or the depletion of agricultural resources.
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