In 2023, agriculture contributed 25% of the Nigerian $375b GDP. This is a sum of $93.7b.
In the same year, ₦228.4b of the nation’s ₦221.83trn budget went to agriculture. It represents 1.05%.
This is equivalent of $523.4m factoring in $435.75 FX rate benchmark of the 2023 budget.
Hence, in the period of foucus the agriculture sector used $523.4m budget to yield $93.7b.
That is, the sector multiplied by 179 folds the inputs provided it.
A principle of effective management is that inputs should go more to revenue generating activities than cost generating activities.
What we have rather is that budgetary allocation barely above 1% consistently goes to agriculture, falling short greatly to the recommended 10% allocation of the 2003 Maputo Declaration on Agriculture and Food Security.
Many sectors not performing as agriculture rather receive huge share of national budget.
This is not to imply that the other sectors are not important and should not receive meaningful allocations.
Finance, defense, health, education and police accordingly occupy 1 to 5 of the top 10 MDAs (Ministries, Departments and Agencies) with the largest allocations of the 2023 budget. These MDAs are important.
Moreover, agriculture was part of the top 10 but only that it was last on the said list. The argument here is that agriculture should receive more allocations as it contributes and require to make more impact.
In sector terms, agriculture surpasses every other sectors to contribute most to the Nigerian economy, only come close to by trade, ICT and manufacturing sectors.
Only the service sector ranks atop agriculture in GDP contributions, but the service sector is a combination of many other important and diverse sectors of the economy hence a reason for its huge proportion of the economy and over agriculture.
However, the agriculture sector is not a monolith either; it has subsectors (although lesser and more related) –crop, livestock, fishing and forestry.
The crop production unit is the largest of the subsectors representing 87.6% of the agriculture sector and which directly constitutes as a unit, 21.9% of Nigeria’s GDP.
This portrays the importance of agriculture to the country’s economy either as a sector or in subunit terms.
While agriculture represents more percentage proportion of the Nigerian economy, the value in sum of such proportion is lower compared to other nations with lower proportion but higher sum value.
Brazil has a population slightly above 200 million similar as Nigeria, this earns it the largest country in South American continent just as Nigeria in Africa.
Brazil is endowed with oil and other mineral deposits, has the highest oil production in S/American and Nigeria endowed similarly leads oil production in Africa as well. Both are ranked 10th and 11th respectively on global oil production rankings.
Agriculture is very much part of the Brazilian GDP ranking (6.8%) behind service (58.9%) and industry (20.7%) sectors as the highest proportion of the nation’s economy just as it is for Nigeria.
However, the agriculture composition has a value of $146.9b of the 2023 total $2.2trillion GDP, 56.7% higher than the Nigerian agriculture contribution value despite having lower proportion to national GDP. This is even more when agribusiness 24.1% GDP value is considered.
Productivity is one of the reasons for such. However, one would see the evident huge difference in national GDP between the two countries despite many similar economic realities.
This is important to factor and is even part of the reasons for the disparity seen, because what is earned is what is shared across sectors, ministries, departments and agencies, for their respective functions, and the health of a nation’s economy determined by GDP can often inform on how prosperous business operators can be.
The Brazilian GDP is about 6 times Nigeria’s GDP. This figure in addition elements of national income and gross national product excluded from GDP compounds total national revenue for budgetary allocations.
According to latest figures, TSE (Total Support Estimate) of $4.45b was given to agriculture in Brazil and the compounded national revenue detailed above explains how Brazil could give such. The TSE is ‘the annual value of all gross transfer from taxpayers and consumers arising from policy measures that support agriculture, net of the associated budgetary receipts’.
Despite the TSE being huge, its productivity to GDP is lower compared to Nigeria’s. The $4.45bn TSE yields 33-folds its value at $146.9b compared to Nigeria’s 179-folds.
However, when compared to the Brazil’s agribusiness 24.1% which comprises agriculture, rural industry and trade and livestock as the Nigerian agriculture has subsectors, the TSE productivity rises with a value of $530.2b and producing higher outcome by 119-folds, but not still up to Nigeria’s.
It thus shows the productivity of the Nigerian agriculture in efficiently using allocations to give greater outcome and which could be more if more resources are committed to the sector.
Nonetheless, the productivity lapse for the Nigerian agriculture comes of expanse of land and workforce deployed to agricultural productions.
For instance, Nigeria undertakes 34million hectares of agricultural uses as against Brazil’s 63.5million hectares. While the latter appears to be larger than the former, Brazil has only cultivated 15.48% of its 410million hectares total arable land compared to Nigeria’s 48.57% of her 70million hectares.
Adding to this, 70% of the Nigerian 216million population is reported to be engaged in agriculture while Brazil has 15.1% of its 100million workforce in agriculture. That is a population of 151.2million people (more than half the nation’s populace) to 15million people which constitutes just 7.1% of 211million Brazilian population.
The productivity problem could also be attributed to the level of mechanisation adoption with Nigeria having 25,000 tractors to 28million farmers to Brazil’s 44,836 tractors to 4.7million farm families. That is 1:1,120 to 1:105 in comparison.
Moreover, Nigeria’s agriculture GDP per capita is also lower at $619.7 (agriculture labour force) or $3,346 (farmers) relative to Brazil’s $31,255 (agriculture) or $112,808.5 (agribusiness).
Despite the many hands involved in Nigeria’s agriculture and more lands put to cultivation, the nation has its worst food inflation this year, ranking 8th among the world’s top 10 worst food inflation, while it has a negative ₦1.037trn agricultural trade balance in 2023.
Rather, in 2022 Brazil had a positive balance of trade $141.6b while still leading the world’s production of coffee, sugarcane, soybean and orange and is amongst leaders of many other arable crops production in the world and poultry and cattle products.
Now back to the significance of national economy in the unleashing of productivity in the agriculture and private sectors with multinational impacts.
The $375b Nigeria’s 2023 GDP just represents 58% of Walmart’s 2023 revenue. This is the largest revenue by company in the world.
Also, Walmart is indigenous to the United States that had a GDP of $27.36trn in 2023, the globe’s highest.
Amazon from the US also comes behind Walmart on such list and with Apple and Microsoft having the largest market capitalisation in the world over $3trn, both also originated from the US.
The health of the US economy and an enabling environment it provides for businesses to flourish is evident in how the mentioned companies progress domestically and dominate global market landscape.
The United States might not be a good comparison to Nigeria with Washington’s GDP about 8-times Africa’s, but it is important to mention that South Africa with 60million population has the largest economy in Africa ahead of Nigeria with a population of 216million and endowed with diverse natural resources.
Nonetheless, we go back to using Brazil as comparison. As opposed to the US with the highest grossing company being private and not into oil production even when the nation is the globe’s largest oil producer, the topmost earning company in Brazil is a state-owned oil company, Petrobas with $118.3b revenue.
The case is similar for Nigeria, NNPC being the highest earner in the country and with $9.5b.
Private businesses then come next in this category, MTN and Vitru with $3.5b and $111.9b respective earnings for both countries being compared. Both companies have something similar with Amazon engaged in technology as a service, the former ICT for communications and the latter for educational purposes.
It would be noted that for both the highest earners, public and private companies, Brazil greatly surpasses Nigeria’s. Even Petrobas (5.3%) and Vitrus (5.0%) form greater percentage of the Brazilian economy than NNPC (2.5%) and MTN (0.9%) in Nigeria. It would be also observed that Petrobas and Vitrus have almost the same percentage GDP proportion.
None of Nigerian indigenous companies even those focused on here feature on the top list of highest earning and market capitalisation in Africa. Only MTN is on the list but as a South African group.
It is thus apparent that the Nigerian economy is smaller compared to what can be and is hindering potentials in many sectors and businesses, agriculture inclusive –with a subpar FDI, FPI, indigenous private and public funds, infrastructure, disposable income and purchasing power, production resources and policies impacting businesses and their environment.
The essence of all this illustration hence was to portray the importance of the economy to sectors and businesses operating within the economy because they often portray how enabling an economy is.
In summary, the Nigerian agriculture is productive giving more value than is received but could be more productive if given the warranted larder budgetary allocation and its production enhanced by incorporation of productive inputs but that the national economy needs to transform to provide enabling conditions that promote such.