The Nigerian Economic Summit Group (NESG) in February 2021 launched its 2021 Macroeconomic Outlook for Nigeria. In the report, the group revealed that only five (5) sectors experienced positive growth in 2020. These sectors include finance and insurance, information and communication, water supply, sewage and waste, human health, social services, and agriculture, which grew by 1.7%. Let’s now take a look at the recommendations of this report and the implications for the country’s agricultural sector in 2021.
The Existing Challenges
It’s no news that the growth of the Nigerian economy in 2020 was stalled by several factors including implementation of lockdowns that led to the disruption of supply chains, fall in crude oil price, and rising cases of insecurity in the country. Consequently, 16 out of 19 economic sectors contracted, leading to an overall contraction of the country’s GDP by 1.92% in the year under review.1
While it may be expected that the lifting of lockdown measures, discovery of COVID-19 vaccines, and the recovery in the price of crude oil since Q4 2020 would translate to a much anticipated economic growth, this may not be so. The NESG reports that “several indicators point to the fact that many of the problems stalling the growth of the Nigerian economy existed pre COVID-19”2. These problems include a steady decline in foreign investment inflow, a decline in external reserves, increasing inflation rates as well as a decline in the balance of trade due to increased importation. Furthermore, an unfriendly investment business environment remains a major challenge, as investor feedback captured by the NESG report centered on challenges such as corruption, bureaucracy in obtaining government approvals, policy inconsistencies, smuggling, poor infrastructural development, and insecurity.
The Way Forward
Having outlined the existing challenges, the report projected a three-case scenario for the Nigerian economy going forward, that is, the best, business-as-usual, and worst case scenarios. These scenarios are hinged on the government's approach towards four priority areas, viz-a-viz;
i. Macroeconomic stability
ii. Policy and regulatory consistency
iii. Sectoral reform and
iv. Human capital development
Deductions from this report validate the assumption that if existing gaps in economic stability are to be bridged in 2021, addressing these four priority areas that cut across different sectors of the economy remain the nation’s best strategic option. Furthermore, in addressing the need for sectoral reforms, the report identified that between 2015 and 2019, crop production made the second-highest contribution to 92.2% of the country’s GDP. The sector contributed 37.2% to the country’s GDP only after telecommunications and information services which contributed 37.7%, while crude petroleum and natural gas in third place contributed 17.3%. This affirms the potentials of the country’s agricultural sector and the role it plays in ensuring economic stability.
Therefore, in focusing on the agricultural sector, we would expect to see more of the following;
1. Consistent and robust policies;
2. Elimination of regulatory and administrative bottlenecks especially in relation to the exportation of agro commodities produced in Nigeria;
3. Enabling a business environment that encourages more private sector-led investments (improved security, infrastructural development, better foreign exchange policies, etc)
4. “Thinking and doing technology”
5. Massive investment and total overhaul of the educational sector. This will produce sound and innovative graduates who will proffer creative solutions tailored to our challenges;
6. Efficient delivery by government MDAs and so much more.
In order for Nigeria to live up to its position as the “giant of Africa,” it is imperative to note that its efforts towards driving economic stability should remain at the center of every proposition. Foreign investors and domestic private businesses will not provide the needed support when the country’s business environment is unfavorable. Succinctly, as a matter of urgency, the government would need to put in more effort at all levels including Federal, State, and Local government to create the change we all desire.
Reference
1. Guaranty Trust Bank Plc (2021): Nigeria Macroeconomic and Banking Sector Themes for 2021
2. The Nigeria Economic Group (2021): NESG Macroeconomic-Outlook 2021. Retrieved from https://www.nesgroup.org/research
The Author
Ogbole Esther
