Nigeria: Sustained Decline in Agric Sector Threatens Nigeria's Growth Projection

22 September 2021

Analysts have cautioned that except the contribution of Agriculture to the Gross Domestic Product (GDP) improves from its current state, the much talked about 2.5 percent growth projected for the end of the year may not materialize.

The Nigerian Bureau of Statistics categorizes agriculture into four sub-activities of crop production; livestock, forestry and fishing.

It stated that crop production plays a major role in its contribution to the sector.

But the increasing rate of insecurity has contributed to the reduction in the contribution of the sector to the GDP as farmlands are not accessible to farmers.

Analysis of the quarterly growth of agriculture from In Q1: 2020 showed that agriculture grew by 2.20% (year-on-year) in real terms, a decrease of -0.97% points compared to the corresponding period of 2019, and -0.11% points from the preceding quarter which recorded a growth rate of 2.31%.

Similarly, the Q2:2020 figures indicate that agriculture grew by 1.58% (year-on-year), a decrease of -0.21% points from the same period of 2019.

In Q3: 2020, the sector recorded 1.39% (year-on-year) in real terms, which was a drop of 0.89% points from the corresponding period of 2019, and a decrease of -0.19% points from the preceding quarter.

In Q4:2020, the sector grew by 3.42% (year-on-year). This was an increase of 1.11% points from the corresponding period of 2019, and an increase of 2.03% points from the preceding quarter which recorded a growth rate of 1.39%.

In the first quarter of 2021, the sector grew by 2.28% (year-on-year), an increase of 0.07% points from the corresponding period of 2020, but a decrease of -1.14% points from the preceding quarter which recorded a growth rate of 3.42%.

In Q2: 2020, the sector grew by 2.20% (year-on-year) in real terms, a decrease of -0.97% points compared to the corresponding period of 2019, and -0.11% points from the preceding quarter which recorded a growth rate of 2.31%.

Speaking on the GDP numbers and the contribution of the Agric secor, The Chief Executive officer of Cowry Asset Management, Johnson Chukwu said: "When you look at what happened in the second quarter of this year when the economy grew by 5.01 per cent, you tend to believe that the economy could actually achieve 2.1 per cent. But it all depends on what will happen in the third and last quarter of this year.

"I don't think the economy will grow at the same rate it grew in the second quarter in the remaining quarter. Assuming it maintains the growth of about three per cent in the two remaining quarters, then we could possibly end the year with the 2.5 per cent GDP growth rate.

"It all depends on what we are doing in the agricultural sector. I always say that agriculture accounts for almost a quarter of the Nigerian GDP but the sector growth has weakened to 1.3 per cent in the second quarter of this year. We all see a major deceleration in the growth rate of the ICT sector which now grew at 5.55 per cent, those two sectors are the largest contributors to the GDP."

Chukwu said the government needs to improve on their growth if It hopes to achieve 2.5 per cent at the end of the year. "If the growth in those two sectors decelerates further, then, it will be difficult to attain that 2.5 per cent at the end of 2021," he further argued.

Rising from the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria, the Committee emphasised the growing need to improve the agricultural value chain, particularly in key commodity products like cocoa, palm oil and cashew to diversify the country's export receipts. It, therefore, called on the Bank to support manufacturing initiatives that could achieve this objective

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