Revisiting the challenges and opportunities of agribusiness in Nigeria

Agriculture remains a veritable source of avenue for food supply, industrial raw materials, employment, means of combating climate change, and revenue for the nation. Unfortunately, what we have today in Nigeria are hunger, shortage of industrial raw materials and its attendant low capacity utilisation, youth unemployment, environmental problems, and dwindling earnings. The diversion of attention from agriculture, which was once the mainstay of the economy, was because of the favourable oil shocks of 1970s. This ushered in the era of ‘oil boom’, which made agricultural products less competitive and emphasis placed on importation of cheap agricultural food and capital items. The over-dependence on oil has not only promoted economic wastage and mismanagement of scarce resources, but it has also made the Nigerian economy susceptible to external shocks¹. 

From 1960 to 1969, the agriculture sector accounted for an average of 57.0% of Gross Domestic Product (GDP) and generated 64.5% of export earnings. From 1970 to late 2000s, the sector’s contribution to GDP and export earnings steadily declined, due to overdependence on petroleum exploration while over the years, the sector has contributed an average of 23.5% to GDP and generated 5.1% of export earnings².

The situation today is that many arable lands are uncultivated making farming to be limited to the subsistence level, use of technology is restricted while the teeming youthful and agile population seem not interested in going into farming to earn a living. Generally, most of the farming population do not have formal education. Statistics show that only about 17%,  13% and 8% of Nigerian farmers have primary, secondary and tertiary educations, respectively, out of which a whooping 62% do not have any form of formal education. This trend is contrary to what is obtainable in developed countries where most farmers have quality formal education and special training on agriculture ³. Other African nations like Sierra Leone is registered as the agricultural sector’s highest contribution to the GDP in Africa, at almost 60%. Chad and Ethiopia followed, with agriculture, forestry, and fishing accounting for approximately 54% and 38% of the GDP, respectively⁴.

Agribusiness is a concept that became popular in the early 1960s and it arose along with recognition of the agro-processing sector as new an emerging sector ⁵. Agribusiness is that line of business, which focuses on the processing, warehousing, distribution, marketing, and retailing of products used in farming.

The agribusiness-enabling environment takes centre stage by focusing on identifying specific policy reforms to effectively regulate seed development and quality control, fertilizer quality control, warehouse receipts, agricultural trade, and land reforms for responsible and inclusive agricultural investments⁶. A number of factors continue to inhibit agricultural stakeholders from playing active roles and making functional towards the development of agribusiness in Nigeria. To begin with, access to funding remains a big problem. Many of the farmers are Small Scale Entrepreneurs (SMEs) with limited capital to run their businesses. Most financial institutions in Nigeria offer loans with high interest rates, demand for collateral that are difficult to meet, and often times, loans are given to people with good connections and leaving out real farmers.

Furthermore, inconsistency in government policies is another setback affecting agribusiness in Nigeria. Policy uncertainty has affected the agriculture sector like every other sectors of the Nigerian economy for every government comes up with its own programmes and policies and cancels the ones by previous governments⁷. Poor and epileptic electricity supply makes agricultural entrepreneurs incur huge resource on power, which often increases cost of production. Poor road networks hinder timely and smooth delivery of goods while high level of insecurity restricts free movement of goods and commodities across the country. Scarcity of foreign exchange is a critical challenge facing agribusiness because most of the equipment used for the cultivation, harvesting and storage of farm produce are not made locally, but imported.

Agribusiness can be promoted when the problems identified above are addressed in part or holistically. What is required is the necessary strong-will, technical knowledge, and favourable legislation to rejig the agribusiness architecture for optimal performance in Nigeria.

This requires bold decisions, policy reforms and the creation of enabling environment for investments and active participation by the private sector in a manner that the government will reduce its involvement and allow a system to thrive and balance itself⁸. Strong-will entails strengthening the existing institutions to be insulated from graft and ineptitude, domestication of agricultural technology (AgricTech) for local content such that Nigerians can operate and maintain sophisticated machinery needed to boost farming and putting in place the right laws and legislation that seek to tackle the problems pertaining to ownership and
acquisition of land, title perfection, indiscriminate payment of land charges and taxes, as well as duplicity of laws for these usually create confusion when it comes to implementation of extant laws.

Commercial farming requires a vast land mass even though land acquisition process is still cumbersome, especially in the southern Nigeria. The reason for this is that land administration is mostly held by families in accordance with customary laws that allow landed property to be passed from one generation to another. Commercial farming requires acquiring landed belonging to families and getting them to agree to sell such heritage is often an uphill task. Aside this, the Land Use Act Cap L5, Laws of the Federation 2004 appears to make the process of land acquiring land more cumbersome⁹. To promote virile agribusiness in Nigeria, the follow points are worth of consideration. Firstly, farmers should be encouraged and assisted to have access to working capital with low interest rates. The government, through its interventionist agencies like the Central Bank of Nigeria (CBN) and Bank of Agriculture (BoA) and should have empowerment programmes targeted at providing single digit credit facilities specific for farmers. Deposit money banks and other financial institutions should increase lending to the agricultural sector. The farmers should improve on their farming management practices to reduce risks and make their businesses bankable.

Adequate infrastructural facilities such roads and power supply should be improved while rising insecurity should be addressed to ensure unhindered movement of agricultural commodities from the farms to other production stages¹⁰. Archaic laws and legislation should be repealed to give way to those that are legally-friendly to the business environment. State governments should make the process of getting Certificate of Occupancy less cumbersome, easy and timely¹¹.

A legal framework for sustainable agricultural practice, which is carefully designed, should be implemented with the necessary political will and involvement of relevant stakeholders, if improvement in economic activities, social equity and increased environmental health, are to be achieved¹². The government and other stakeholders should increase awareness among farmers on where there are opportunities for them to aid production, which many farmers and beneficiaries are not aware of¹³. Government at all levels, through the various ministries, departments and agencies with mandates to promote agriculture, should engage more extension officers, who will educate the farmers on the best and modern farming practices using technologies (AgricTech) to mitigate low quality farm produce and improve various input and output processes¹⁴. The right agricultural policies should be put in place to encourage local production of food and industrial raw materials. More importantly, bodies like the Nigerian Bar Association Section on Business Law (NBA-SBL) should facilitate the delivery of legal services in the agriculture sector by empowering lawyers with requisite skills to function in that capacity¹⁵