Government urged to bolster agricultural sector for economic growth

Analysts at United Capital Plc. and FBN Quest have advised the need for government to pay close attention to the agricultural sector, especially the insecurity issues to enable an efficient growth in the sector.

According to analysts at United Capital, the agricultural sectors has unexploited potential that could improve the economy of the country and attention should be more devoted to the sector.

“In our FY-18 outlook, the silver lining we noted that to unlock the Agriculture sector’s hidden potentials and further bolster its contribution to the broader economy, it is essential that the government revisit its commitment to allocate 10 percent of its national budget to the sector as agreed in the Maputo Declaration alongside other African states” said United Capital.

They continued: “However, based on the recently signed N9.1 trillion 2018 budget, current allocation to the sector is way below target, standing at a meagre N203.1 billion which is 2.2 percent of the 2018 budget, thus, the sector growth is hinged on sustained favourable policy directives, rather than budgetary allocations.”

Leaning towards the views of United Capital, analysts at FBNQuest said the sector is unfortunately underfunded as it has so much more to offer the economy at large,

“We can say that the federal government underfunds the sector although it has numerous competing claims for its limited funds. The 2018 budget allocates N54 billion and N149 billion to the agriculture and rural development ministry for recurrent and capital spending respectively.

“The CBN has played a role in sector financing since 1977. Its most visible current initiative is the anchor borrowers’ programme. It is lending and providing guarantees where commercial banks are reluctant to tread alone. For example, it provided N25 billion to the Sunti Golden Sugar Estates in Niger State through a consortium of banks at a single-digit interest rate”, said analyst at FBN Quest.

On the effects of insecurity on the agricultural sector, FBN Quest was quick to acknowledge that the government have incorporated different promising schemes and initiative but they have been toppled by high insecurity threats in food-producing states.

“There are promising initiatives in place such as the value chain development programme, launched by the federal government and the United Nation’s IFAD. They are however undermined by insecurity across many growing areas, resulting in production losses, pressure on food prices and large-scale internal displacement.”

United Capital suggested that in H2 2018, government should intensify efforts to subdue the insecurity threats plaguing food producing states especially as the 2019 elections are in view.

“Also, going into H2-18, and as the 2019 election draws near, we expect the government to intensify effort to tame the ongoing insecurity threats in the food producing states.

“Overall, given the positive prospect of the broader economy in 2018, the Agriculture sector as a key driver of growth is expected to remain resolute in the positive region, notwithstanding government’s paltry budgetary allocation. However, to unlock the long-term potential of agriculture and prevent further food price inflation, structural constraints on basic infrastructure and distribution channels must be addressed.” United Capital analyst added.

The consensus is that activities in the agricultural sector have slowed over time and despite the government’s desire to make a better environment for the agricultural sector to thrive, the insecurity in food-producing states have nullified efforts. There is a sense that the sector continues to suffer neglect and the government should show more commitment through budget allocation to the sector.