February 27, 2024/CSL Research
Nigeria’s agricultural sector grew by 1.13% in 2023 in real terms compared to the 1.88% growth rate recorded in 2022. In Q4 2023, the sector grew marginally by 2.77% to 2.10% from 2.05% in Q4 2022. The data also revealed that the sector’s contribution to GDP declined in 2023 to 25.18%, lower than its 25.58% contribution in 2022.
The agricultural sector comprises four sub-sectors: crop Production, livestock, forestry, and fishing. The agricultural sector has faced mounting challenges in recent times, underscoring the urgent need for strategic interventions to address the multifaceted issues In 2023, Nigeria experienced a historic downturn in its agricultural output, primarily attributed to several factors. The redesign of the Naira in the first quarter set the stage for economic challenges.
Additionally, the agricultural sector grappled with idiosyncratic risks, including insecurity, climate changes, and escalating input costs. The removal of the fuel subsidies, which led to escalating fuel prices and logistics costs, further strained the agricultural sector. Consequently, higher production expenses translated into increased food prices. Notably, the country’s food inflation rate reached unprecedented levels, surging by 148 basis points to 35.41% in January 2024 compared to 33.93% in December 2023.
Insecurity has been the most serious of the sector’s problems, with farmers forced to stay away from their farms causing severe food shortages. We believe that a holistic approach is needed to tackle this menace. In our view, to enhance productivity in the agriculture sector, Nigeria must address the structural problems that have hampered its development.
These include, among other things, inadequate infrastructure, limited access to finance and markets, low adoption of technology and innovation, inadequate extension services, insecurity and conflict, climate change, and environmental degradation. That said, in 2024, we expect the sector’s growth to improve marginally, aided largely by base effect and improved rainfall conditions. We forecast a growth rate of 1.62% in 2024 from 1.13% in 2023.
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