Nigeria's economy in 2023 faced some nagging challenges, particularly by the country's own hand. Major sectors in the West African nation were impacted by said challenges, including one of the country's premier sectors; agriculture. Production in this industry faced roadblocks in the form of fuel subsidy removal and a monetary policy initiated by the country's current administration.
- Economic growth in Nigeria last year was hindered by a couple of government policies.
- These policies had a significant impact on Nigeria's agricultural sector.
- AFEX notes an 80% increase in exports, but challenges with rising costs persist.
According to a recent report by AFEX titled the "AFEX 2024 Annual Commodity Review and Outlook Report," Africa was particularly hard hit, with economic growth slowing to 3.3%. This resulted in higher energy and food costs and higher living expenses.
Commodity markets saw a 24% drop from their 2022 peaks as a result of the economic challenges, even if prices were still higher than they were before the COVID-19 pandemic.
In Nigeria, there were a slew of issues that hampered economic growth, according to the report. "The Nigerian economy faced its share of the prevailing global and regional economic challenges, aggravated by various government policies," the report read in part.
The policies in question are the fuel subsidy removal and the floating of the country's currency, by the country's new administration.
As of the 30th of January, the Naira had hit N1.400 per dollar.
However, total exports soared by 2% in 2023 compared to 2022. Agricultural exports increased by roughly 80%, although they accounted for just around 3% of overall exports.
"Notably, key agricultural export commodities included Cocoa beans, sesame seeds, cashews, and Soybeans, whereas the primary agricultural import commodity remained wheat sourced from countries," the report states.
While the sector may have seemed promising, the aforementioned policies affected agricultural inputs because production in the country mostly relies on importing raw materials or semi-finished goods. Consequently, the average price of agricultural inputs increased significantly as a result of the exchange rate drifting.
Although there was a little decrease in fertilizer costs internationally, the increase in exchange rates from N460 to almost N1000 eclipsed any respite, with a predicted intensification of this trend in 2024. Additionally, the walk that followed, the report notes.
"The majority of farmers now grapple with a rapid escalation in operational costs. Concurrently, meeting other socio-economic needs amidst soaring headline inflation has pushed many farming households into poverty," the report states.
Unintentionally, the cumulative impacts of these reforms have cast a shadow over the Nigerian agricultural sector. Presently, the sector faces an elevated risk of decreased participation, diminishing production, and stagnant productivity, exacerbating the challenges farmers already confront with poverty and food insecurity," it adds.
Source of the article: Business Insider Africa
