The 2013 budget and sound macro-agroeconomic policies
By Tukeni Obasi
As the year gradually winds down, Nigerians across the country are making plans – plans for the holidays, plans for the new year. As students prepare for their exams, companies are preparing their budgets for 2013, and parents are looking forward to being reunited with other family members. Many people have begun to take stock of the year, celebrating feats, identifying shortcomings, and penning resolutions, dreams, and goals for the new year.
In the agricultural sector, things are no different. Two months ago, the president unveiled the budget proposal for 2013, the main signifier of the nation’s economic policy and priorities. As Nigeria remains one of the top emerging economies on the continent even with very difficult developmental challenges (high unemployment, grinding poverty in certain parts, internal displacement and heightened insecurity), the country’s macroeconomic turn in 2013 has important implications for how far Nigeria can rise in the near future and whether it will begin to live up to its potential. This would require a departure from high recurrent expenditures that have become the bane of the Nigerian bureaucracy – high estacodes, extravagant projects and celebrations, the maintenance of defunct or unnecessary structures, and miscellaneous over-the-top allowances for some public officials. For a country serious about economic prosperity, in its place of corruption-fuelled consumption, capital expenditure would need to take precedence. With increased earnings on the domestic and international markets, decreased imports, increased infrastructural development, and increased private sector investment/capital inflows, the Nigerian economy could witness a quick turnaround.
So what exactly is the national budget saying in this respect? With an allocation of N668.56 billion, the security sector is top on the agenda, followed by education (N426.53 billion). Other notable sectors include health, power, and works. And then at the bottom of the list, you have agriculture at a mere N81.41 billion – making it less than 2 percent of the entire budget and only N2.4 billion higher than last year.
The arguments from all quarters stating that agriculture has been under-prioritised are not unfounded. With the introduction of cassava bread and the e-wallet fertiliser scheme, the launching of the agricultural transformation agenda (ATA), and the unexpected tragedy of the floods, 2012 has been quite an eventful year. But with the promise of youth employment and value chain expansion in eight sectors, bigger, long-lasting prospects loom on the 2013 horizon. In 2012, the fiscal measures focused on slashing imports and increasing domestic production of cassava, rice, wheat as well as investing in fertiliser input and agricultural machinery. In 2013, this scope has been expanded to the value chains to five other crops as the government seeks to further curtail importation and boost national productivity. What’s more, job creation for youths has figured prominently in the rhetoric and roadmap, promising a bigger role for agriculture in the national economy.
In light of this, it is obvious the problem with agriculture’s portion is not that it is small, but that there’s not enough investment happening in a sector that promises great and stable returns – something Nigerians and the economy desperately need. The present allocation, which makes agriculture seem marginal, does not reflect the status of agriculture in the nation as the key to rural and urban development, job creation and youth employment, and the growth of domestic industry and local enterprises. Put differently, given agriculture’s solid economic value proposition to our nation, the current allocation does not exactly present the nation with a chance to fully realise its economic potential.
And where does that leave us? The plain answer is: quite far behind. Because of the dilapidated state of many subsectors in agriculture and the current infrastructural challenges, a lot of work remains to be done. And once one factors in the floods which washed away thousands of farmlands, rendering many farmers homeless and without a source of livelihood, the threshold for take-off becomes a little higher.
To catch up, the administration must remember, as Akin Adesina, the minister of agriculture, has emphasised, that agriculture is not a charity case but an asset to be exploited – a cash cow, if you will. Furthermore, it must be remembered that once agriculture fully takes off and becomes the mainstay of the economy, there’s no telling how strong our economy will be, leading to regular budget surpluses.
To get there, however, we must buckle up now and make smart strategic decisions involving heavy investment in key sectors. These investments will help sustain and multiply the results of the flood recovery plan, see the expansion of the eight target value chains, kick-start the Youth Employment in Agriculture Programme (YEAP), and promote infrastructural development, leading to increased output and productivity. Indeed, these investments will spell the difference between a struggling agricultural sector and one that stands tall on the international market, leading the competition in price and quality. But without the much-needed capital, the success of these projects will be undermined.
At the same time, there remains cause for hope. Higher allocations do not guarantee high returns, just as low allocations do not guarantee low returns. Not all sectors will manage their allocations efficiently and some properly-managed sectors may even end up producing a lot more with less. With a sustained emphasis on efficiency, productivity, targeted and effective extension services, quality outcomes, private sector investment and the enhancement of small- and medium-scale entrepreneurs, the agricultural sector can still deliver. Indeed, 2012 has shown us just how much momentum can be raised with N78 billion and the right leadership. But as a country which has become too comfortable with the practice of ‘just managing’, it is my hope that this time we will heed the words of that nursery rhyme and not rest until the good is better, and the better best.
Originally published in Business Day.