Assessing the impact of rice sector policy reforms on the income mobility of rural households in Nigeria

Henry Okodua
agrodep working paper
2017

Nigeria’s agricultural policy has evolved considerably since the country gained political independence in 1960. The priority at that time was to boost domestic production, particularly of cash crops, and the country has had good results to show for these efforts, becoming the largest producer of rice in West Africa. However, Nigeria also remains a notable global net rice importer. Nigeria’s rice production is primarily undertaken by small-scale producers and is characterized by low productivity owing to inefficient production systems and the country’s aging farming population. The Nigerian government recently introduced a number of initiatives under its Agricultural Transformation Agenda to address these issues and achieve the government’s goal of rice self-sufficiency. In August 2014, the Dangote Industries Limited signed a Memorandum of Understanding with the Federal Government of Nigeria for a US$1 billion investment in commercial rice farming and modern integrated rice mills. The Nigerian government has also agreed on similar collaborations with other private investors. Using a static computable general equilibrium (CGE) framework, the study investigates the potential additional income benefits or losses for rural Nigerian households stemming from the government’s current initiative of tariff barriers on imported rice and increased domestic rice production. The study also probes into the potential of the policy to produce considerable employment gains for rural households in Nigeria under the assumption that local rice production will displace imported rice. The findings reveal that the implementation of the new policy on domestic rice production will produce considerable employment gains for all households and for most sectors of Nigeria’s economy. The policy will also result in an overall income gain for both rural and urban households, although these gains will be larger for rural households. There is therefore the compelling need for the current administration of the Federal Government of Nigeria to sustain the implementation of these rice policy reforms.