A General Equilibrium Analysis of Agricultural Policy Reforms and Poverty in Nigeria

This study develops and applies a computable general equilibrium model to analyse the economy-wide effects of major agricultural policy reform scenarios on poverty and income distribution in Nigeria. Partial equilibrium analyses of agricultural policy, which are the dominant approach in Nigerian agricultural economics literature, fail to capture the cross-sectoral linkages and economy-wide feedback effects that determine the full welfare consequences of agricultural policy changes. A CGE approach provides a more comprehensive analytical framework for assessing the poverty and distributional effects of reforms including fertiliser subsidy removal, agricultural trade liberalisation, and public agricultural investment reallocation. This study constructs a Nigeria Social Accounting Matrix for 2022 using data from the National Bureau of Statistics, CBN, and NAERLS, disaggregated into 25 sectors, 10 household groups, and 5 factor types. A static CGE model with microsimulation extension is estimated to capture household-level poverty effects. Four reform scenarios are simulated: fertiliser subsidy removal, rice import liberalisation, irrigation investment doubling, and agricultural research expenditure increase. Findings reveal that fertiliser subsidy removal reduces rural household welfare among the poorest quintile by 8 percent in the short run, while generating efficiency gains in the agro-input market. Irrigation investment doubling generates the largest positive poverty reduction effect with minimal macroeconomic distortion. The study contributes an original Nigerian agricultural CGE model and recommends sequenced reform implementation with protective social transfer accompaniments.

Keywords: computable general equilibrium, agricultural policy, poverty, Nigeria, social accounting matrix.