By Peter Osalor
In a recent pronouncement, the Nigerian Central Bank announced the establishment of a federally-assisted programme specifically aimed at promoting agricultural enterprises.

The Commercial Agriculture Credit Scheme (CACS) is a unique initiative launched as part of President UM Yar’Adua’s Seven Point Agenda for economic revival and accelerated growth.

It will provide concessionary funding to small farmers through credit guarantees and interest draw-back support. Initial outlay for the scheme stands at a respectable $1.4 billion, to be disbursed through participating commercial banks.

The Nigerian government is understandably optimistic about the programme and its potential to increase farmland output, diversify the revenue base and provide vital resources and raw material to the manufacturing sector. The idea of agriculture and agro-based industry as a strategy for accelerated economic growth is slowly beginning to take hold.

In Western Africa, agriculture accounts for an estimated 40% of combined GDP and employs up to 70% of the available working population. Agricultural commodities are the second largest export from the region to the European Union, although most goods are traded without any local value addition. This represents a significant failure to produce high-value products that can enhance profitability in agro-operations and provide much-needed employment.

Exports to newer markets are often held back by concerns over compliance with international production standards. Further, the region’s high transportation costs inflate the price of agro-products in local markets and lower export competitiveness. The gross outcome of these conditions is that developing economies in West Africa and elsewhere generate only $40 by processing one ton of agricultural products against $180 in developed countries.

Fortunately, this persistently bleak outlook for agriculture across sub-Saharan Africa is gradually beginning to change and Nigeria is poised to take the lead in reversing the trend. In the first decade after its independence in 1960, the traditionally agrarian Nigerian economy contributed 60% of GDP and more than a third of total export revenue.

The country was the world’s top exporter of palm oil and had commercialised production of several cash crops including cocoa, cotton, rubber, groundnut and kola nut. The situation changed radically when the oil boom of the ’70s shifted focus away from cropping and petrochemical exports became the primary national obsession.

Agriculture was marginalised into a labour-intensive, low-productivity subsistence activity that eventually plunged large parts of rural Nigeria into abject poverty. Despite several resuscitation attempts over the decades – including the 1972 National Accelerated Food Programme, the 1976 Operation Feed the Nation and the Green Revolution initiative of 1980 – the steady descent of agriculture continued till the very end of the last century.

The redirection of agricultural policies affected since the return of democracy in 1999 proved more successful. Under a radical reforms programme, Abuja targeted rural development with integrated plans for agriculture promotion, rural industrialisation and infrastructure development. This integrated approach has yielded tangible results: Agriculture now leads the country’s economic recovery, bouncing back to contribute 42% of GDP by 2008.