That Nigeria is in its second recession within a four-year period is no longer news, after recording two consecutive quarters of negative growth. Also, no, the agric sector has not recorded a quarter of negative growth that could land it in a recession if the following quarter is also negative. However, the growth rate of one of the highest contributors to Nigeria’s GDP has been on a consistent decline over the last four quarters.
Agriculture grew by 2.31 percent in Q4 2019, but this growth rate slowed down to 2.2 percent in Q1 2020; further slowing to 1.58 percent in Q2 2020 and finally 1.39 percent in Q3 2020, which is the most recent data available from the National Bureau of Statistics (NBS).
While the sector is still recording positive growth, the rate at which it is growing has continued to decline and may get worse considering the myriads of challenges the sector has had to contend with this year. In the coming months, industry watchers anticipate growth rate may in fact reduce even further as there is little or no evidence of any policy or strategic push to address at least, the peculiar issues that challenged growth this year. More so, the usual suspects that stunt agricultural productivity over the years are yet to be curtailed and will remain obstacles to growth in the sector for the near future.
It has been suggested in some quarters (and perhaps erroneously) that the sector now contributes 30.77 percent to overall GDP. It should be made clear that was only a quarterly contribution recorded in Q3 2020, and more importantly, Agriculture’s contribution to GDP is on the rise not because agriculture is “doing better” but because other sectors are performing worse. Generally, as earlier highlighted, the sector’s growth rate has been on a decline.
To illustrate with a couple jointly contributing N100 in their home, with one contributing N60 and the other N40 (also at par in percentage calculations). When the income of the highest contributor shrinks to, say, N45 because of a pay cut, and the other shrinks to N35, the total contribution to that home then becomes N80 (from N100). More importantly, the partner who brought in 60 percent (N60 of N100) would now account for 56.25 percent while the other would be 43.75 percent.
As the couple jointly records decline in income, while the partner that once contributed 40 percent now accounts for 43.75 percent, they are contributing more, not because of an increase in the monetary value they now bring in, rather, because the other person has shed significant value in income. This analogy describes the seemingly expanding contribution of agriculture to Nigeria’s GDP.
Growth rate in the sector is slowing down, despite the amount of attention it appears to have enjoyed from government in recent years. If the growth rate at the end of 2020 ends up being lower than that of 2019, it will not be a first.
Previous BusinessDay analysis of NBS data showed between 2011 and 2018, that for every year the agric sector recorded a growth, it would decline the following year, and as abysmal as this is, it was an established pattern for six years between 2011 and 2016. In 2017, however, the sector declined in growth rate, and this decline continued in 2018.
In 2011 the Agric Sector recorded a GDP growth rate of 2.92 percent in real terms. In 2012 the sector improved, recording 6.7 percent, but the following year, 2013, declined to 2.94 percent. It again rose in 2014 to 4.27 percent, and going by the now established pattern, declined yet again in 2015 to 3.72 percent. It increased in 2016 to 4.11 percent, and as now established to be the pattern, declined to 3.45 percent in 2017. The sector however failed to grow the following year, 2018, it was expected to grow again, going by the pattern established over time, but instead further declined to 2.12 percent.
It finally picked up in 2019 with a growth rate of 2.36 percent, but is likely to drop again when full year 2020 is recorded, due to declines throughout the three quarters already captured.
