PIND and the DFID-funded Market Development Program in the Niger Delta (MADE) collaborated to produce a report on the impact on the recent naira devaluation and import tariffs on agriculture in the Niger Delta. You can find the full report here.
Our lead researcher on this report and CEO of Time Economics Dr. Ogho Okiti has traveled with us to present this report to different stakeholders, including the international donor community, government agencies and private sector. In this interview, Dr. Okiti shares observations he made while working with us to put together the report and gives insight into what the reports’ conclusions mean for both government and non-government actors working in agriculture in the Niger Delta.
For the naira devaluation study, you had to talk to a lot of different people, from smallholder famers to feed producers to processors. These people were based in different places with different income levels and very different vantage points, but was there any common thread in how they are dealing with the recent economic difficulties?
When we talked to the different stakeholders in the course of our research, we noticed two things.
First, we noticed what is known as an income effect. The general level of consumption has fallen as inflation, rising unemployment, and lower incomes have squeezed their real incomes. This does not mean that consumption of all goods has fallen; rather, it means that consumers’ total spending on goods and services has reduced.
Secondly, we also noticed a substitution effect. As the value of the Naira fell, which caused an increase in the prices of imported goods, consumers have generally switched to locally-produced goods as an alternative. This has led to an increase in demand for some local goods even as the general level of demand has fallen.
Are there any peculiarities to keep in mind that may make the impact of the import tariffs and currency depreciation different in the Niger Delta than elsewhere?
Most of the farmers in the Niger Delta are smallholder farmers and as such, they do not currently use much fertilizer, crop protection products, vaccines etc. This means the impact of increases in the price of imported versions of these products on the operations of farmers in the area may be smaller than in other areas, which may have larger farms. The other side of this is that it reduces the likelihood that farmers will make investments in inputs that will increase their productivity.
On a scale of 1 to 10 (in ascending order), how prepared would you say the private sector is to take advantage of the market opportunities presented by the downturn with regards increased demand for local products?
I would rate private sector preparedness at a 7. We have seen quick movements by private sector actors to shift investments to the areas that have seen increased demand. However, factors such as availability of credit and an uncertain policy environment mean that these movements have not been as quick as they would have had to be to meet the increased demand.
What does this study mean for conversations on improving access to technology and improving youth and women’s benefit in agriculture?
The shift in demand to locally-produced products has opened up opportunities for value addition in many areas. Some of these value additions are already performed by women and this has had a positive effect on the incomes of women in agriculture. It has also underscored the need for increasing the access that smallholder farmers have to technology that can increase their productivity.
Organizations like PIND and MADE have been working in the agricultural space, especially in the Niger Delta. Do the recent economic issues mean a change of approach is needed to economic development programming meant to improve efficiency in agricultural value chains?
The recent economic issues mean that economic development programming that is meant to increase productivity in agriculture is becoming increasingly important. The increase in price of imported goods has made locally-produced goods more competitive. However, for this increase in competitiveness to become permanent, farmers will need to invest in increasing their productivity. Economic development programming by PIND and MADE should focus on helping farmers increase their productivity and on using the recent increase in incomes that they have experienced to invest in higher productivity measures.
When considering the Federal Government’s work of the past two years in agriculture, do you think that their approach to agriculture needs to change considering the prevailing economic climate and especially for the benefit of the Niger Delta?
The Federal Government has a number of programs, such as the Anchor Borrower’s Program and its Fertilizer Initiative, which it has established to improve the state of agriculture in the country. These have had some success in bolstering the agricultural sector, as shown by the growth rate of agriculture compared to the rest of the economy. However, the FG has failed to align its trade policy with its exchange rate policy. Although it has spoken of encouraging import substitution, the FG has worked to reverse some of the effects of the devaluation thereby reducing the incentives for import substitution.