Q3 GDP report and the agric sector

In a release on Friday last week of Nigeria’s third quarter gross domestic product (GDP), the National Bureau of Statistics put the growth rate at 2.54 per cent. It also stated that the agriculture sector contributed 29.31 per cent albeit lower than the Q2 contribution. In this report, BENJAMIN UMUTEME examines the impact on the nation’s food security.

Experts were excited that with Nigeria’s microeconomic indexes, the country’s Gross Domestic Product would rebound and they were not disappointed when the National Bureau of Statistics (NBS) on Friday last week released its Nigerian Gross Domestic Product Report (Q3 2023) showing that the GDP recorded a growth rate of 2.54% (year-on-year) in real terms in the third quarter of 2023. This growth rate is higher than the 2.25% recorded in the third quarter of 2022 and higher than the second quarter 2023 growth of 2.51%.

The performance of the GDP in the third quarter of 2023 was driven mainly by the Services sector, which recorded a growth of 3.99% and contributed 52.70% to the aggregate GDP. The agriculture sector grew by 1.30%, from the growth of 1.34% recorded in the third quarter of 2022.

The growth of the industry sector was 0.46%, an improvement from -8.00% recorded in the third quarter of 2022. In terms of share of the GDP, agriculture, and the industry sectors contributed less to the aggregate GDP in the third quarter of 2023 compared to the third quarter of 2022.

Financial analyst, Gabriel Idakolo told Blueprint Weekend that “the 2.5 percentage growth in 3Q GDP is a positive sign that we can still recover from our economic challenges despite the huge setbacks of insecurity, inflation, etc.

“The services sector largely driven by the telecoms sector shows that there is untapped potential in the sector.”

Sectoral breakdown

Sectoral breakdown indicates that the oil sector’s real growth was –0.85% (year-on-year) in Q3 2023, indicating an increase of 21.83% points relative to the rate recorded in the corresponding quarter of 2022 (-22.67%). Growth also increased by 12.58% points when compared to Q2 2023 which was –13.43%. On a quarter-on-quarter basis, the oil sector recorded a growth rate of 12.47% in Q3 2023. The Oil sector contributed 5.48% to the total real GDP in Q3 2023, down from the figure recorded in the corresponding period of 2022 and up from the preceding quarter, where it contributed 5.66% and 5.34% respectively.

Non-oil sector

The non-oil sector grew by 2.75% in real terms during the reference quarter (Q3 2023). This rate was lower by 1.52% points compared to the rate recorded in the same quarter of 2022 and 0.84% points lower than the second quarter of 2023. This sector was driven in the third quarter of 2023 mainly by Information and Communication (Telecommunication); Financial and Insurance (Financial Institutions); Agriculture (Crop production); Trade; Construction; and Real Estate, accounting for positive GDP growth. In real terms, the non-oil sector contributed 94.52% to the nation’s GDP in the third quarter of 2023, higher than the share recorded in the third quarter of 2022 which was 94.34% and lower than the second quarter of 2023 recorded as 94.66%.

Agriculture sector

The report further stated that the agricultural sector recorded less contribution to the GDP compared to the second quarter.

According to the NBS in the report, the sector grew by 11.06 per cent year-on-year in nominal terms in Q3 2023, showing a decrease of 9.02 per cent points from the same quarter of 2022.

“Looking at the preceding quarter’s growth rate of 11.42 per cent, there was a decrease of 0.37 percentage points. Crop Production remained the major driver of the sector. This is evident as it accounts for 92.24 per cent of the overall nominal value of the sector in the third quarter of 2023.

“Quarter-on-quarter growth stood at 45.59 per cent in the third quarter of 2023. Agriculture contributed 26.36 per cent to nominal GDP in the third quarter of 2023. This figure was lower than the rate recorded in the third quarter of 2022 and higher than the second quarter of 2023 which recorded 27.55% and 21.07 per cent, respectively.

“The agricultural sector in the third quarter of 2023 grew by 1.30 per cent (year-on-year) in real terms, a decrease of 0.04 per cent points from the corresponding period of 2022, and a decrease of 0.20 percentage points from the preceding quarter which recorded a growth rate of 1.50 per cent. It grew on a quarter-on-quarter basis at 39.74 per cent.

“However, the sector contributed 29.31 per cent to overall GDP in real terms in Q3 2023, lower than the contribution in the third quarter of 2022 and higher than the second quarter of 2023 which stood at 29.67 per cent and 23.01 per cent respectively.”

The Food and Agricultural Organisation (FOA) in a report titled: Nigeria Agriculture at a Glance stated that despite the contribution to the economy, Nigeria’s agricultural sector faces many challenges which impact on its productivity. These include; poor land tenure system, low level of irrigation farming, climate change and land degradation. Others are low technology, high production cost and poor distribution of inputs, limited financing, high post-harvest losses and poor access to markets.

According to the UN agency, “these challenges have stifled agricultural productivity affecting the sector’s contribution to the country’s GDP as well as increased food imports due population rise hence declining levels of food sufficiency.”

“For instance, between 2016 and 2019 Nigeria’s cumulative agricultural imports stood at N3.35 trillion, four times higher than the agricultural export of N803 billion within the same period.”

In spite of the federal government’s implementation of several initiatives and programmes to address the situation which are aimed at increasing agricultural productivity in order to provide sufficient quantities of food to meet domestic demand as well as an abundance of commodity crops for export in the international market.

Also, these are aimed at reversing forest loss and degradation; promoting sustainable management of natural resources; rehabilitation of degraded lands and reducing erosion and climate vulnerability.

Matching words with action

For Idakolo, the minor contribution of the agriculture sector to the GDP is a sign that the government’s policies to drive the sectors’ growth had not started yielding results.

According to him, the government should rise up and match its word with action.

“The performance of the agricultural sector is expected because the Federal government has not started implementing its aggressive agricultural policies which are expected to give a new lease of life to the sector. The government needs to match words with action to ensure that the agricultural sector contributes its quota significantly to the GDP,” he said.

In chat with this correspondent, financial analyst, Cobhams Nsa, said the government should go beyond rhetoric if it wants to see an improvement in the agric sector contribution to GDP.

He said, “Whatever is happening in the economy is the insecurity challenge. Agriculture cannot thrive in the place of insecurity. The farmers, agro-related businesses are affected by insecurity, definitely, the GDP would be affected.

“It will continue to be a campaign slogan that has not solved the problem of insecurity, has not improved the situation for the farmers to go back to the farm, for agro-related activities to kick-start properly for the government to achieve what they want to achieve.”

Political economist, Adefolarin Olamilekan said with the way the economy was going the GDP figures were unexpected.

“The reality of the present situation is what is going on with the security situation across the country. .

“ This instructively is the bane agriculture poor performance in the period under review. Adding to this is sabotaging element activities that compound farm gate and market access.

“Also is the perennial problem of flooding and related challenges. This encompasses corruption in the agriculture sector with misappropriation and embezzlement of funds. Similarly, is the misplacement in agriculture policy such an impact of mechanized farming as against subsistence farming,” he said.

What govt must do

Adefolarin posited that the government needs to rethink its agricultural policies and be more pragmatic.

“Another is for the government to see agriculture as business and not as intervention or quasi intervention, that is cosmetics and ad hoc as a patronage.

“Sadly this in the long-run created that balance and gaps in the sector performing poorly.

“Tackling insecurity across board be it farmers, herders violence, banditry and kidnapping, and communal clashes will go a long way to increase the sector’s contribution to GDP.

“We cannot overemphasise fixing our infrastructure problem that is critical to market access and food supply chain enhancement.”