Agriculture growth shrinks to 0.90% in Q1 on naira crunch

Nigeria’s agricultural growth is set to shrink by 0.90 percent in the first quarter of 2023, the first contraction under the Buhari administration, data from the National Bureau of Statistics showed.

The sector has contracted by 0.90 per cent in real terms in Q1’23, which is 4.06 per cent lower than the 3.16 per cent recorded in the same period in 2022, the report said.

The NBS attributed the overall decline in the country’s economic growth to the adverse effects of cash crunch experienced in the first quarter of 2023, and the agriculture sector among other sectors contributed to this data.

“The deceleration in growth is attributed to the adverse effects of liquidity crunch experienced during the quarter,” NBS said in the report.

In October 2022, the CBN introduced the Naira Redesigned Policy to replace the old N200, N500, and N1000 notes with the new versions.

The policy was poorly managed by the apex bank and led to cash crunch, which negatively affected businesses, especially agribusinesses due to the short shelf life of fresh produce.

Also read: Nigeria’s manufacturing sector growth slows to 3-year low in Q1

As commercial banks parted with the limited banknotes at their disposal in the first quarter of the year, farmers lamented a glut of various kinds, as the period was characterized by buying cash from POS operators at premium prices, and retail consumers were stuck buying only essential items.

“The cash crunch coincides with poor network systems across banks and service providers. Sometimes we went to buy things for our business and stayed there for minutes without end trying to get paid,” said Emmanuel Futughe, poultry manager, Tabai Farm, Abuja.

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Farmers were reported to be in severe distress in various parts of the country, while cash crunch persisted, as they kept counting losses on buyers and the inability of buyers to raise enough cash to buy from them.

The situation was further worsened when some traders and service providers did not accept the transfers. Perishable food items including bananas, vegetables, fruits etc. were left to rot,” and this first quarter data which shows a contraction in the growth of this sector is a testimony to the fact that the farmers at that time The hardships he had seen also had an impact on his health results,” say analysts.

Today, whatever benefits the Naira redesign policy may have had have been canceled out by economic and social ruin and gridlock. Kingsley Moglu, former deputy governor of the CBN, said we are still suffering even after the “almighty” presidential election has come and gone.

The Supreme Court ruled on March 3 that the old N200, N500 and N1,000 notes should remain legal tender until December 31, 2023. In compliance with the Supreme Court’s decision, CBN gave a directive on 13 March.

Meanwhile, Nigeria’s agriculture has long been recognized as a sector that can drive economic growth and development if supported sufficiently to grow enough food.

On a quarter-on-quarter basis, the sector’s contraction of 0.90 per cent in Q1 ’23 is lower than the previous quarter, which registered a growth rate of 2.05 per cent.

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