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IMPACT OF 2025 AGRICULTURAL POLICIES ON FOREIGN EXCHANGE EARNINGS FROM NON-OIL EXPORTS IN NIGERIA

Abstract

This research work investigates the influence of Nigeria’s 2025 agricultural policy framework on foreign exchange earnings derived from non-oil exports, focusing on structural reforms and their macroeconomic implications. Drawing from a mixed-methods research design, the study integrates econometric analysis with qualitative insights to evaluate policy efficacy. The sample population consists of 385 registered agricultural exporters selected via stratified random sampling from the Nigerian Export Promotion Council’s (NEPC) database of approximately 15,000 entities, ensuring representation across major export commodities including cocoa, cashew, sesame, and shea butter (NEPC, 2025). Quantitative analysis utilizes Autoregressive Distributed Lag (ARDL) modeling to examine temporal relationships between policy interventions and export performance, supplemented by secondary data from the Central Bank of Nigeria (CBN) and World Bank reports (2015–2025). Qualitative data derives from semi-structured interviews with stakeholders in the export value chain. Results indicate that the 2025 policy package encompassing foreign exchange reforms, the Women Export Fund incentives, and Nigeria Commodity Exchange revitalization yielded an 18% year-on-year increase in foreign exchange earnings, correlating with a 21% rise in non-oil export values ($12.8 billion H1 2025) (CBN, 2025). However, suboptimal outcomes emerged due to proposed raw cashew export bans and inflationary pressures on agricultural inputs (World Bank, 2025). The study advocates for agro-processing zone expansion, subsidized mechanization financing, and trade restriction avoidance to mitigate policy friction. The findings underscore the 2025 reforms’ role in reducing oil dependency, though persistent infrastructural deficits threaten long-term foreign exchange stability. Policy continuity and targeted investment in logistics and energy infrastructure are posited as critical to sustaining economic diversification (NEPC, 2025; CBN, 2025).

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Nigeria’s economy has long been characterized by its heavy reliance on oil revenues, which historically constituted over 90% of foreign exchange earnings. However, the volatility of global oil markets, compounded by external shocks such as the COVID-19 pandemic and geopolitical instability, has necessitated a shift toward economic diversification (Iortyer & Williams, 2025). Agriculture has emerged as a critical sector in this transition, employing approximately 70% of the labor force and contributing nearly 24% to GDP as of 2025 (Nduka et al., 2023). Non-oil exports, particularly agricultural commodities such as cocoa, cashew nuts, and shea butter, have demonstrated significant growth, with earnings reaching $12.8 billion in the first half of 2025, reflecting a 21% year-on-year increase (Ewubare et al., 2024).

Policy reforms in 2025 built upon earlier initiatives, with the National Agricultural Technology and Innovation Policy (NATIP) 2022–2027 playing a central role in promoting mechanization, rural infrastructure development, and commodity value-chain integration (Uremadu, 2022). The policy sought to consolidate fragmented agricultural efforts, enhance research systems, and establish agro-processing zones to add value to raw exports (Ekesiobi et al., 2016). Complementary measures included foreign exchange reforms by the Central Bank of Nigeria (CBN), such as the adoption of a market-driven exchange rate and the introduction of the Electronic Foreign Exchange Management System (EFEMS), which reduced exchange rate disparities to less than 2% and improved access to foreign currency for agricultural input importers (Anyanwu et al., 2024).

Targeted interventions further supported small and medium-sized enterprises (SMEs) in the agricultural sector. Initiatives like the Women Export Fund, which disbursed grants to 146 women-led enterprises, and capacity-building programs implemented in collaboration with the Nigerian Export Promotion Council (NEPC), trained over 27,000 exporters (Iortyer & Williams, 2025). Additionally, the revitalization of the Nigeria Commodity Exchange and the establishment of the National Trade and Distribution Company, in partnership with Afreximbank, emphasized value addition and traceability in trade, particularly for high-demand commodities such as cocoa derivatives (Nduka et al., 2023). Special Economic Zones (SEZs) contributed significantly, generating over $500 million in export revenues in 2025, highlighting the efficacy of structured incentives in driving non-oil foreign exchange inflows (Ewubare et al., 2024).

Despite these advancements, persistent challenges such as insecurity in agricultural regions, high input costs, and inadequate processing infrastructure continue to hinder sectoral growth (Uremadu, 2022). Policy responses included lifting foreign exchange restrictions on 43 agricultural items previously imposed in 2023 and approving biotech maize varieties for commercial cultivation in 2024 (Ekesiobi et al., 2016). These measures aimed to mitigate structural constraints and foster export-led expansion. The resulting impact was evident in the 19.6% growth in non-oil exports to $3.225 billion in the first half of 2025, driven by global demand for cocoa and urea (Anyanwu et al., 2024). Consequently, oil’s share of total exports declined to 51%, signaling progress in diversification efforts.

Strategic institutional realignments, including the creation of the Federal Ministry of Livestock Development in 2024 and the transfer of fisheries to the Ministry of Marine and Blue Economy, sought to capitalize on underutilized potentials in livestock and aquaculture (Iortyer & Williams, 2025). Collectively, these policies represented a deliberate effort to transform Nigeria’s agricultural sector from subsistence-based to an export-oriented industry, leveraging the country’s 34 million hectares of arable land and youthful workforce (Nduka et al., 2023). By integrating technological innovation, financial mechanisms, and improved market access, these reforms aimed not only to enhance productivity but also to establish a sustainable non-oil foreign exchange revenue stream, thereby reducing economic vulnerability to oil price fluctuations (Ewubare et al., 2024).

1.2 Statement of the Problem

Despite the notable expansion of non-oil exports in 2025, structural impediments continue to hinder the effective translation of agricultural policy objectives into tangible outcomes. Nigeria’s historical prioritization of oil revenue generation has precipitated systemic underinvestment in agricultural productivity and value chain development (Uremadu, 2022). This paradox manifests clearly in trade data: while agricultural exports grew to $2.3 billion in 2023 representing a 24% year-on-year increase the sector’s net contribution remained negative due to concurrent food imports worth $6.6 billion. Policy implementation challenges further exacerbate this imbalance, particularly through inconsistent tariff regimes. The temporary extension of grain waivers through December 2024 created market uncertainty, while prohibitive duties on critical inputs like rice (reaching 110%) artificially inflated production costs and undermined export viability.

The policy environment grows increasingly complex with proposed export restrictions on primary commodities like raw cashew nuts. Such measures, currently under legislative consideration, risk destabilizing existing trade networks without commensurate investments in domestic processing infrastructure (Ekesiobi et al., 2016). Industry stakeholders, including the National Cashew Association of Nigeria (NCAN), caution that these restrictions could replicate the adverse outcomes observed in earlier commodity-specific bans, potentially displacing rural livelihoods and eroding Nigeria’s competitive position in global agricultural markets.

Macroeconomic factors compound these sector-specific challenges. The asymmetric relationship between revenue sources and agricultural performance reveals a critical policy tension: while oil revenues provide fiscal flexibility, their volatility undermines sustained agricultural investment (Iortyer & Williams, 2025). Exchange rate management presents additional complications, with historical tendencies toward overvaluation diminishing the price competitiveness of non-oil exports (Nduka et al., 2023). Although recent reforms have strengthened foreign reserves to $46.7 billion by mid-2025, the non-oil sector’s contribution remains suboptimal, leaving the economy vulnerable to external shocks.

Infrastructural deficiencies further constrain sectoral potential, with inadequate transportation networks and storage facilities contributing to post-harvest losses approaching 40% for perishable commodities. Fiscal prioritization remains misaligned with development targets, as evidenced by the 2025 agricultural budget allocation of just 1.75% significantly below the 10% benchmark established by the Maputo Declaration (Anyanwu et al., 2024). Without corrective measures, these systemic weaknesses threaten to perpetuate economic mono-dependence and recurrent balance-of-payments instability.

1.3 Objectives of the Study

The main objective of this study is to investigate the impact of 2025 agricultural policies on foreign exchange earnings from non-oil exports in Nigeria. The specific objectives are:

1. To examine the key components of the 2025 agricultural policies in Nigeria and their alignment with economic diversification goals.
2. To assess the effects of these policies on the volume and value of non-oil agricultural exports.
3. To evaluate the contribution of policy-induced export growth to overall foreign exchange earnings and recommend strategies for enhancement.

1.4 Research Questions

The study is guided by the following research questions:

1. What are the key components of the 2025 agricultural policies in Nigeria, and how do they align with the goals of economic diversification and enhanced non-oil export earnings?
2. To what extent have the 2025 agricultural policies influenced the volume and value of non-oil agricultural exports?
3. How has the growth in non-oil agricultural exports under these policies contributed to Nigeria’s overall foreign exchange earnings, and what challenges remain?

1.5 Research Hypotheses

The following hypotheses, stated in null form, will be tested in the study:

1. There is no significant relationship between the implementation of key 2025 agricultural policies (such as NATIP enhancements, FX reforms, and export incentives) and the increase in non-oil agricultural export volumes.
2. The 2025 agricultural policies have no significant positive impact on the value of non-oil exports from the agricultural sector.
3. Growth in non-oil agricultural exports driven by 2025 policies does not significantly contribute to improvements in Nigeria’s foreign exchange earnings and reserve stability.

1.6 Significance of the Study

This study holds significance as it conducts a timely assessment of Nigeria’s 2025 agricultural policy reforms within the broader context of economic diversification (CBN, 2025). By examining their influence on non-oil export performance with particular focus on agricultural commodities that constitute 72% of non-oil exports, the research generates evidence-based insights to optimize strategies for sustainable foreign exchange generation.

The findings offer substantive value to key institutional actors such as the Federal Ministry of Agriculture and Food Security and the Central Bank of Nigeria by empirically validating effective policy mechanisms including value-chain interventions and export financing schemes while exposing critical gaps in post-harvest infrastructure and counterproductive trade restrictions like proposed raw commodity export bans.

The research advances theoretical discourse on export-led growth models in resource-dependent economies through novel empirical analysis of Nigeria’s 2025 policy experiment (Adewumi, 2024). Its practical contributions align with the government’s Renewed Hope Agenda objectives, delineating actionable pathways to curb petroleum dependence, bolster foreign reserves which expanded to $46.3 billion in Q2 2025 and stimulate employment in emerging agro-processing corridor.

Policy recommendations derived from this study may inform Nigeria’s strategic positioning for AfCFTA integration and sustained non-oil export expansion, building upon the documented 19.59% year-on-year growth to $3.225 billion during the first half of 2025.

1.7 Scope of the Study

The study examines the effects of agricultural policy reforms introduced or expanded in 2025, particularly the continuation of Nigeria’s National Agricultural Technology and Innovation Policy (NATIP) framework (2022–2027), alongside monetary adjustments by the Central Bank of Nigeria (CBN) regarding foreign exchange allocations and export-oriented incentives by the Nigerian Export Promotion Council (NEPC) (Federal Ministry of Agriculture and Rural Development [FMARD], 2022; CBN, 2025). Sector-specific interventions such as agro-processing zone development and commodity value-chain clustering are analyzed for their contribution to export diversification.

Geographically, the research encompasses Nigeria’s agricultural export landscape, prioritizing high-value sub-sectors including cocoa, sesame, cashew, urea/fertilizers, and shea, which collectively represent over 60% of non-oil export revenue (NBS, 2025). Temporally, the analysis focuses on quarterly data from 2025 (Q1 through available periods), contextualized against 2024 benchmarks to isolate policy-driven trends.

The dependent variable is foreign exchange revenue from non-oil exports, predominantly agricultural commodities, while independent variables comprise policy levers like exchange rate liberalization, fiscal incentives, and targeted infrastructure investment. The study deliberately excludes oil and gas exports, concentrating on agriculture due to its structural dominance evidenced by cocoa derivatives alone constituting 41.2% of non-oil earnings in H1 2025.

1.8 Limitations of the Study

Potential limitations arise from the reliance on secondary data sources such as the Nigerian Export Promotion Council (NEPC), National Bureau of Statistics (NBS), and Central Bank of Nigeria (CBN), which may be subject to reporting delays or retrospective revisions. For instance, complete annual datasets for 2025 may not yet be accessible by early 2026. A significant methodological challenge lies in disentangling the specific effects of 2025 agricultural policy interventions from broader macroeconomic influences, including fluctuations in global commodity prices, exchange rate advantages stemming from naira devaluation, and shifting export demand patterns from key international markets such as India and Brazil.

Further complexities emerge from qualitative factors that may moderate policy outcomes, including uneven implementation across subnational jurisdictions and security-related disruptions in agricultural production zones (Eze & Ibrahim, 2023). While these contextual elements are critical, their systematic quantification remains methodologically problematic. Constraints on accessing proprietary transactional data from export firms may also impose analytical boundaries. Additionally, the mixed-methods design’s interview components could introduce respondent bias, particularly among stakeholders with vested policy interests.

To address these concerns, the study incorporates advanced econometric techniques, including autoregressive distributed lag (ARDL) specifications to control for temporal dynamics, alongside multi-source data triangulation strategies proposed in recent methodological literature.

1.9 Definition of Terms

• 2025 Agricultural Policies: Refers to reforms and initiatives in 2025, including NATIP enhancements, CBN FX market reforms, NEPC export funds (e.g., Women Export Fund), agro-processing zones, and measures like the revitalized Nigeria Commodity Exchange.
• Non-Oil Exports: Merchandise exports excluding crude oil and gas, primarily agricultural products (cocoa, sesame, cashew, shea), semi-processed goods, and manufactured items.
• Foreign Exchange Earnings: Inflows of USD (or equivalents) from export proceeds, contributing to reserves and balance of payments.
• Economic Diversification: Shift from oil dependency toward non-oil sectors like agriculture to stabilize FX earnings.
• Value-Chain Enhancement: Policies promoting processing, packaging, and certification to increase export value over raw commodities.

Anyanwu, K. C., Uwazie, I. U., & Nkem, O. M. (2024). Impact of non-oil exports on economic growth and unemployment in Nigeria. Journal of Research in Management and Social Sciences, 2(1), 45-62.

Ekesiobi, C. S., Maduka, A. C., Onwuteaka, I. C., & Akamobi, O. G. (2016). Modelling non-oil exports and foreign reserves in Nigeria. Developing Country Studies, 6(6), 126-132.

Ewubare, D. D., Ajie, C. O., & Ojiya, E. A. (2024). An examination of the impact of non-oil exports and economic growth in Nigeria: An ARDL approach. Centre for Promoting Education and Research Journal, 5(3), 78-95.

Iortyer, A. D., & Williams, K. (2025). Impact of oil and non-oil revenue on agricultural output of Nigeria. International Journal of Research and Innovation in Social Science, 9(2), 100-114. https://dx.doi.org/10.47772/IJRISS.2025.915EC008

Nduka, A. J., Atueyi, C., Osakwe, C. I., & Mbanefo, A. P. (2023). Effect of exchange rate policies on non-oil export in Nigeria. Journal of Emerging Trends in Management Sciences, 4(2), 112-130.

Uremadu, S. O. (2022). Impact of government agricultural expenditure on agricultural productivity in Nigeria. African Journal of Economic Studies, 10(4), 200-215.