Let me start my recalling that economists divide all economic activity in an economy into two broad categories, which are goods and services.
So it is either a country is producing goods or producing services. Before 2014, it was always reported that Nigeria’s agriculture contribute close to 40 percent of the nation’s GDP but after the last rebasing of the economy in 2014, the Nigerian economy showed a declining share of the agricultural sector contribution to GDP in line with the global trend.
Currently, the share of agriculture in Nigeria’s GDP is revolving around 21 and 22 percent, behind the service sector which is over 50 percent.
This implies that the global economy is now service based rather than factor (goods) based. This also means that developing economies must endeavor to move from being a factor driven economy to a service driven economy.
If an economy is more service bases, by implication it means that the various industries that make up the service sector employ more people and creates more wealth than other sectors including the agricultural sector.
So let me briefly describe what constitute the service sector in an economy; according to encyclopedia Britannica, “the service sector is that part of the economy that creates services rather than tangible goods.”
So in the service sector, you will have activities such as research, private professional services, government services (including defense and administration), banking, it, communications, entertainment, wholesale and retail trade, medicine, nonprofit economic activity, all consumer services and many more. This would explain why very highly developed economies have agriculture at 2 to 3 percent share of GDP In a country like Israel, even the tourism sector contributes over 15 percent of the GDP while the agricultural sector is around 3 percent.
Globally, the highest contributor to GDP now is the service sector or the manufacturing sectors, implying that what drive a contemporary economy are ideas and services. “In the early 21st century, service industries accounted for more than three-fifths of the global GDP and employed more than one-third of the labour force worldwide.”
Let me give a background to my argument: there are different stages of national development; the first state is described as the factor-driven stage; at this stage, countries competiveness is based on natural endowments such as agriculture, natural resources (solid minerals, crude oil etc.) And labour. The second stage is the investment driven stage, which is characterized by manufacturing and service export.
The final stage is the innovation-driven stage where the country develops the ability to produce innovative products and services at the global technology frontier using the most advanced methods. This is where you find countries like USA, UK, EU states, Israel and some Asian countries. As countries develop, their labor force shifts from agriculture to industry and services, and in the process, the well-being of the people improves.
The idea is that a developed service sector helps to reduce the amount of labour input into the agricultural sector and other goods based sectors.
The aim of this piece is to shed some light on the economic logic that drives developmental processes and stages as well as the important role that agricultural productivity plays in it; I would want to argue that agricultural productivity growth in developing countries as it stands now is only a key to employment and poverty alleviation and not essentially a condition for national development in the contemporary world.
Many people will not agree with this theory but it’s time we Africans understood that the developed world wants us to remain where we are with this concept of comparative advantage-remaining in agriculture at the production level. So we continuously remain as producers of raw materials for their industrial manufacturing sectors.
This is how it works; during the era of slave trade, African work in European farms for the production of raw material, but now, Africans are working in African farms and still produce for the same European industries.
My point is that production agriculture does not develop an economy; it is the manufacturing and service sector that can make us competitive in the global system.
In recent times, there have been too many campaigns by government and public speakers for youths to go back to agriculture; my question to them is- agriculture at what level. What innovations are in place to encourage the youth to produce at a globally competitive level. Why should we have an army of youths in the farms when the over 80 percent of the population that are already farming are not efficient, it shows that we are still at the medieval stage of development. As a matter of fact, we need to reduce the number of farmers we have in Nigeria if that is possible.
In Australia, only about 135,000 farmers feed a nation of over 80 million and still has surplus for export. The youth should rather be employed in sectors that will develop innovations that can complement the agricultural sector and improve the efficiency of the already existing farmers rather than them being on the farms.
My point is that the continuous practice of agriculture at the primary level without innovation leaves us at the 19th century development stage. It would be noted that countries that want to develop economically transit from being dependent on agricultural commodities to being dependent provision of services (for instance, can you imagine how much England makes by selling their football leagues to the world).
While we accept our realities, let us at least move to the second stage of economic development which is manufacturing; turning the agricultural raw materials to intermediate or finished goods, Agriculture’s role in structural transformation has been demonstrated in many countries, especially in Asia, no doubt. But competition in the global market is way beyond groundnut pyramids and cocoa-boards.
For me, the medieval stage of development starts with production agriculture, because people need to work and eat; the history of England, US, Japan is a clear evidence of agricultural revolution preceding industrial revolution.
What is my point? My point is that there is too much emphasis on the Nigerian agricultural sector as if national development depends on it. To the extent that it creates employment, agriculture is good, but for Nigeria to compete in the contemporary global economy; we must recognize that we are in an innovation driven times where agriculture will plays just a complementary role and therefore we must develop that industry and service sectors.
Aguiyi, a researcher and writer, writes from Lagos
