How Much Should Be Set Aside In The Budget for Nigeria’s Agricultural Sector?

…the Budget for Nigeria’s Agricultural Sector

President Bola Tinubu recently signed the N28.78 trillion Nigerian budget for 2024 into law, with less than 2% going to the agriculture sector. Ikechi Agbugba discusses the perfect agricultural budget in this conversation with EHIME ALEX, an agro-economist, senior lecturer at Rivers State University, and visiting professor at Rome Business School (African Campus).

The ICIR: How would you rank the performance of the agriculture sector over the eight years of the previous administration in terms of financial allocation?
Agbugba: It is not possible to meet the agricultural budget in the near future. It can be consumed in stages and portions, ranging from more to less significant. In terms of mechanization, it is only through mechanization that we can increase agricultural productivity. Automation of manufacturing, or mechanization, is a capital-intensive process that has to be prioritized. The attainment of complete mechanization by the typical Nigerian farmer is contingent upon the implementation of suitable financial policies.

It was clear that the Buhari government gave agriculture varying amounts of its budget. Under Buhari, agricultural budgetary allocations were made. The numbers speak for themselves: food costs in Nigeria skyrocketed, and agriculture suffered greatly. I’ll characterize it as sneaky.

Records under his administration showed that budgetary allocation for agriculture increased from 1.7% in 2017 to almost 2.0% in 2018, but decreased once more to 1.56% in 2019 and 1.34% in 2020 before showing a minor improvement to 1.37% in 2021.

It’s interesting to note that in 2022, the agriculture sector received the largest allocation in the previous four years—just 1.8%. Is there anything more I should say? It is the government’s responsibility to raise the portion of its budget devoted to agriculture; even if they succeeds, the allocation will still have a corresponding effect.

The ICIR: What changes must Nigeria implement to increase the economic contribution of its farm sector?
Agbugba: It is pointless to allocate funds to a sector that is leaking. Blocking the leaks and encouraging Nigerian farmers to register are essential; all other things being equal, contractors and other intermediaries should rarely be engaged when carrying out projects and programs. The rule of the day should be transparency. It is imperative to acknowledge that the fertilizer supply program implemented under previous President Goodluck Jonathan was praiseworthy and successful due to the government’s departure from conventional economic practices.

Since these are urgent matters, do allow me to be brief. I’ll enumerate them as follows:

• Governance: Increased political leadership is essential.
• Public communication channels should be improved.
• Farmers should be able to obtain loans and other incentives with some control and responsibility.
• Develop technical proficiency;
  Retrain individuals in education.
  Encourage the use of biopesticides, biofertilizers, and other bioproducts; Upgrade oversight of agricultural projects and programs; Implement new government initiatives;
  bolster the network’s security;
  Promote and uphold projects for a circular economy and create sustainable frameworks.
  Address climate change and transhumanist pastoralism.
  increased exports and decreased imports.
  Irrigation system reconstruction

The ICIR: Mechanization, dam and irrigation facility maintenance, storage, research and development, and other concerns that have an adverse effect on farmer production are challenges that Nigeria has to solve. How can this be adequately addressed by an agricultural budget?

Agbugba: Nigeria’s agriculture industry has one of the lowest levels of mechanization in the world, according to the National Agricultural Technology and Innovation Policy 2022–2027, which was posted on the website of the Federal Ministry of Agriculture and Rural Development.

In order to increase domestic food security and obtain access to international markets, an agricultural budget should, of course, give policy direction for cooperation amongst key players in the agriculture value chain. Without a doubt, among other options, mechanization, irrigation systems, research and development, and digital agriculture are here to stay.

Any day, the stories from Thailand and Israel make for interesting case studies. Permit me to draw attention to Kenya’s 2022–2023 budget’s low agricultural budget, which drew criticism from the country’s civil society. Despite agriculture accounting for around 25% of Kenya’s gross domestic product (GDP), the National Treasury put aside over 40 billion shillings, or over N200 billion, for the sector. I also believe in Kenya M-PESA, which is the fintech with the fastest global growth rate.

In their 2023–2024 budget, Kenya committed over 8.6 billion shillings for the National Agricultural Value Chain Development program and 2. 7 billion shillings for the National Agricultural and Rural Inclusivity Project. I would be happy if the Nigerian government could take a page from Kenya’s book.

It’s interesting to note that the plan my team is creating to rebuild Africa through the agricultural sector will effectively revive Nigeria’s economy—but only if we can allocate the resources required for each of the continent’s six geopolitical zones. Though a thoroughfare may have been promised by the route, we shall arrive when it is feasible. There is no time to spend identifying the true farmers so that we may reach out to them and direct them toward such important activities. Our goal is to close the gap that exists between industry and research.

We are also closely collaborating with educational institutions, particularly universities, to promote this through African diaspora groupings, particularly the African Diaspora Collective, North and South America, and the African Union Secretariat.

I advise against doing things the traditional way. In light of this, it makes some sense to prioritize agriculture for the safety and independence of our country. I have to admit that things are not going as normal anymore.

The ICIR: How should the budget for the farm industry be structured?
Agbugba: Every country has a distinct optimum budget for agriculture. Consider the UK government’s decision to raise financing by about £168 million in order to enhance farming output. Through greener equipment, robots, and automation, the money is intended to stimulate innovation, enhance production, and support animal health and welfare. This is very different from what one would expect from a typical African nation like Nigeria, the continent’s largest nation.

When conditions were good, we ought to have allocated a sizable budget for agriculture. Even now, we have failed this easy-to-understand but crucial test, and the parties involved keep making the same mistakes. Since farm enterprises are price takers and the factors influencing the prices they receive might be uncontrollable, agricultural revenue can be erratic and unpredictable. It is also the primary cause of farmers’ requests for more working capital because they want funding to cover ongoing expenses. Collective action and agricultural cooperatives, however, may offer a simple solution in some situations.

As one of the most effective means of eradicating extreme poverty, fostering shared prosperity, and providing food for the projected 10 billion people by the year 2050, allow me to argue that the top priority for an ideal budget in a nation endowed with an abundance of agricultural resources must be given to agricultural development. By doing this, everything stays equal, and the subsectors of forestry, fishery, cattle, and agriculture start to produce comparable returns.

I will be forced to argue that, if the government is sincere about ensuring food security, three percent of the budget is too little, and that, for the first five years, at least ten percent should be set aside, with an upward review to follow.

The ICIR: What additional recommendations do you have for the Nigerian government about the execution and distribution of the agriculture budget?
Agbugba: Priority topics include macroeconomic stability, human capital development, poverty alleviation, macroeconomic security, local employment creation, and social security, which have been emphasized by governments. It’s interesting to note that the budget is around 27% more than the budget for 2023. In the meantime, the President wrote to NASS to request approval of an external borrowing plan worth £100 million and $8.6 billion for essential infrastructure, including power, roads, water, railroads, and health.

The national should set the example for the sub-national. Policies are designed to communicate from the top and work their way down. More cooperation between the top and bottom is required. It’s worse at the subnational level. The budget may present a chance to accelerate the agricultural sector’s development engine, which is clearly the main employer.

Given the success of Southeast Asian economies, particularly those in Indonesia, which grow oil palm (a Nigerian-originated crop) and palm oil, the federal government needs to take a cue from these regions. The Green Revolution had intervened in both countries nearly simultaneously. The term “third agricultural revolution” also refers to this intervention, which increased crop yields significantly and even touched on technology transfer programs.

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The Institutional Quality for Competitiveness provides a summary of their concept and breaks it down into social, economic, administrative, and political streams.

The administrative stream emphasizes a well-designed business permit procedure, an effective bureaucratic structure, and a high-quality vocational education system.
They prioritized inter-religious peace, inter-racial/ethnic/cultural concord, and cultural variety literacy from their vantage point on the social stream.
Robust intellectual property rights regimes, harmonizing regulatory frameworks, and open and forward-thinking trade policies are stressed on the economic side of the equation.
Lastly, the political stream highlighted open and transparent policy and legislative measures, meritocratic politics, robust corruption control, and political openness.
The ICIR Nigeria signed the Maputo commitment in 2003, promising to devote 10% of its yearly budget to agricultural development in order to maximize growth and ensure food security. However, Nigeria has not yet complied with the commitment. What do you think about this?

It is, in fact, now a top priority. Regretfully, a few of our leaders do not consider agriculture to be important. In order to guarantee food security and increase employment, the president must be dedicated to seeing it through to completion.

Retorting that food security is still a major concern in Nigeria, where millions of people live in poverty, hunger, and malnourishment, is so trite. It will take comprehensive, all-encompassing approaches to address the core causes of this problem, which include gender inequity, climate change, food loss and waste, and so on.

It was suggested that African nations increase agricultural production by 10% of their yearly budgets overall. The signatories concurred that, in order to boost agricultural production, 10% of public funds should be allocated to agriculture.

I can only conclude that transformation in Nigeria is a slow process. Changing deeply ingrained conventions that determine who is seated at the decision-making table requires effort. Continual interaction with the government, local communities, and traditional leaders will impact the choice to sign this kind of agreement.

When I asked this same topic in front of captains of industry and driven executives at Rome Business School, their reaction wasn’t too far from what I’ve already hinted at. Recall that Nigeria withdrew her ratification instruments after the African Union urged African countries to do so in order to advance trade liberalization under the African Continental Free Trade Area (AfCFTA).

Credit: Ehime ALEX