Nigeria's agriculture sector draws significant attention because it is regarded as one of the best routes to economic diversification. In addition, due to its broad value chain, it provides the opportunity to increase employment creation and encourage entrepreneurship. Illustrating its importance to the economy is the fact that it accounted for roughly 29.7% of GDP in Q3 ’22 and is estimated to provide employment for about two-thirds of the country’s labour force. Despite its significant role in the economy, recent sector outcomes have fallen below expectations.

The latest national accounts show that the agriculture sector grew by a paltry 1.34% y/y in Q3 ‘22, slightly up from 1.2% the previous quarter. This is a very poor outcome, particularly considering the CBN’s credit interventions in the sector.

According to the monetary policy committee’s (MPC) latest communique, the CBN’s cumulative disbursements to the sector amounted to NGN1.8trn as at Oct ’22. The CBN’s monthly economic report for August estimates that the sector received about 34.6% of the apex bank’s total credit interventions.

Beneficiaries under these interventions include over 4.6 million smallholder farmers under the Anchor Borrowers’ Programme (ABP) and agro-processors and producers involved in over 680 projects under the Commercial Agriculture Credit Scheme (CACS).

The CBN’s data shows that deposit money banks' credit disbursements to the sector have steadily increased to 6.1% of their total credit exposure as at Jun ’22 from 3.1% in Jun ’16.

The CBN’s efforts have been blunted by structural supply-side issues outside its remit such as the insecurity in major food-growing regions of the country, poor infrastructure, post-harvest losses due to inadequate storage facilities, and low mechanisation amongst others.

Regardless of the sector’s low growth of recent, some successes have been recorded. For instance, thanks to the ABP the country’s annual rice production increased to over 5.3 million metric tonnes (mmt) in 2021 from c.2.9mmt in 2011, according to USDA data.

If security issues and other structural issues are overcome, the CBN's and other government agencies' continued involvement in the sector has the potential to significantly increase sector productivity and reduce Nigeria's food import costs.