Government’s Attempts In Vain as Food Imports Surge by 122%, Trade Deficit Reaches N4.9 Trillion

In spite of sustained government initiatives aimed at bolstering food production in Nigeria through various intervention programs, the country has incurred a trade deficit in food amounting to N4.92 trillion between 2018 and 2022.

Available data reveals that Nigeria’s domestic food production falls short of meeting the demands of its population, leading to a necessity for imports. Consequently, to cater to its progressively growing populace, the nation witnessed a significant 121.7 percent surge in the worth of imported food within the five-year span, escalating from N857 billion in 2018 to N1.9 trillion in 2022.

This phenomenon could be linked to the escalating insecurity within the country, particularly in its agricultural regions, which has compelled numerous farmers to abandon their fields. Consequently, the government has been forced to allocate substantial funds for food imports on an annual basis.

Statistical information sourced from the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN) demonstrates that the cumulative agricultural imports into Nigeria from 2018 to 2022 stood at N6.916 trillion. In contrast, the overall agricultural exports from the nation during the same period amounted to N1.997 trillion, yielding an agricultural trade deficit of N4.919 trillion.

The data also underscores consistent growth in agricultural imports since 2018, starting at N857 billion and progressively escalating to N959 billion in 2019, N1.2 trillion in 2020, N2 trillion in 2021, before slightly subsiding to N1.9 trillion in 2022.

Over this identical time frame, agricultural exports from Nigeria tallied N302 billion in 2018, N270 billion in 2019, N322 billion in 2020, N505 billion in 2021, and N598 billion in 2022, signifying a surge of 98 percent from 2018 to 2022.

Several analysts attribute the export upsurge to the robust non-oil export promotion policies enacted by the government, rather than a genuine escalation in output. This development is viewed as potentially detrimental to the nation’s food security.

A correlated report from the NBS also indicates that the decrease in food production in Nigeria cannot solely be attributed to the impact of insecurity. The report highlights that the prices of crucial agricultural inputs such as seeds, pesticides, fertilizers, and agricultural machinery have substantially increased during this period. This escalation has constrained farmers from expanding their production and has led to a reduction in output.

Despite various interventions by federal agencies, the situation remains largely unresolved.

Anchor Borrowers Program disburses N1.08 trillion The federal government has dedicated significant financial resources over the years to numerous agricultural programs aimed at spurring local food production. The Central Bank of Nigeria (CBN) reported that it had disbursed a total sum of N1.08 trillion to farmers through the Anchor Borrowers Program (ABP) between 2015 and 2022, spanning seven years.

The CBN also highlighted that it allocated N12.65 billion to three agricultural projects under the ABP between January and February of 2023. Launched in November 2015, the ABP was designed to enhance agricultural output, bolster foreign exchange earnings, and reverse Nigeria’s unfavorable food trade balance.

Apart from the ABP, various other schemes like the Commercial Agriculture Credit Scheme (CACS) and the Accelerated Agricultural Development program have been implemented to enhance the country’s food production. Analysts estimate the collective value of these programs, in addition to the ABP, to surpass N3.0 trillion over the years.

Nonetheless, the nation continues to grapple with a substantial shortfall in the supply of essential staple foods, particularly as the population growth rate remains on an upward trajectory.

Although agriculture contributes 22 percent of Nigeria’s total GDP and engages over 80 percent of the workforce, the lack of resources among smallholder farmers, who are responsible for 90 percent of food production, hampers productivity.

Analysts attribute this predicament to a challenging operational environment characterized by low productivity, significant post-harvest losses, minimal value addition, fragmented markets, and inefficient value chain logistics.

Enhanced Government Involvement in Agriculture Essential — CPPE Providing insight into the situation, Dr. Muda Yusuf, CEO of the Center for the Promotion of Private Enterprise (CPPE), emphasized the necessity for increased government intervention in agricultural inputs. He stated that an improved security environment would undoubtedly bolster the sector’s performance.

Dr. Yusuf commented, “The escalating food import bill is deeply concerning, especially for a nation as abundantly endowed with arable land and numerous other natural resources as Nigeria. The fundamental issue is governance.”

He underscored the need for proactive government intervention in areas such as agricultural inputs, technology integration, financing, processing, marketing, logistics, land access, and storage. Dr. Yusuf pointed out that the private sector alone cannot provide these crucial support systems. He highlighted that these support mechanisms were present in Nigeria prior to the military’s involvement in political governance in 1966.

He concluded that an improvement in the security situation would inevitably lead to a better performance in the agricultural sector, consequently benefiting employment rates and food security within the nation.

Negative Ramifications for Naira Value Highlighted by NACCIMA Engaging with Financial Vanguard on this issue, Sola Obadimu, the Director General of the Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), attributed the growing dependence on food imports to factors such as insecurity, deteriorating infrastructure, and the absence of power and preservation facilities for domestically produced agricultural goods.

Regarding the economic implications, particularly the effect on the Naira’s value, Obadimu pointed out that the Naira could potentially continue to depreciate. He stressed that strengthening the Naira necessitates an emphasis on exports outpacing imports and a commitment to consuming locally available products. He also emphasized the importance of reducing unnecessary cravings for imported luxury items.

While acknowledging the need to address corruption surrounding the opaque fuel subsidy system and the dual forex rates, Obadimu underscored that the infrastructure in more advanced economies is considerably superior. He emphasized that for Nigeria to strengthen its economy and its currency, it should focus on improving its infrastructure quality to justify the adoption of liberal market forces.

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