Nigeria sets stage for agricultural revolution

IFDC redemption clerksThe African Union has labelled 2014 the “Year of Agriculture and Food Security”, with the hope of triggering a second green revolution on the continent; but many experts are not holding their breath after similar promises have failed to deliver results. Aminu Imam examines the contending issues.

Countries such as Rwanda, Ethiopia and Ghana are making strong progress in agriculture. while others, such as Nigeria, are fast catching up.

Farmers, agronomists and development experts say that new technology will not bring radical transformation on its own, particularly in the short term. Quicker gains can result from improving access to markets, transport and storage, which will sharply reduce the amount of food that rots every year between fields and markets.

Experts also believe Africa could make quick wins making more of underused technologies, particularly irrigation and chemical fertilisers.

Under optimal conditions, agricultural development has proven to be an effective engine not only to power a developing nation’s economy but also to sustain its prosperity. Growth in the sector has a multiplier effect in emerging markets, sparking growth in non-agriculture sectors as well.

With the 2010 appointment of Dr. Adesina as Minister of Agriculture and Rural Development, the FG announced that it would be exiting the business of fertilizer distribution. “Within the first 90 days of this administration, we ended the 40-year-old fertilizer sector (issues),” said Adesina recently. “The old system of government buying and selling fertilizers was scrapped, and all fertilizer companies were required to sell directly to farmers, not to government warehouses.”

The FGN’s new Growth Enhancement Support (GES) program is one of the government’s first steps in balancing its focus between the oil and agriculture sectors. To reach farmers directly, the 2013 GES program utilised electronic vouchers that were received by farmers through mobile phones (also known as an “e-wallet” system).

The system allowed registered farmers to receive text messages alerting them that they could pick up their input package at a local redemption center.

IFDC provided technical expertise in the design and implementation of the program and coordinated supply-side activities in 15 states. This included coordination with input suppliers and government officials to ensure that an adequate stock of fertilizers was available throughout the program. Covering the entire nation, the program linked more than 4.5 million farmers to subsidized fertilizer; IFDC directly helped 2.4 million farmers to access the critical input within the 15 states coordinated by the Center.

“It is nothing short of amazing that the GES has already reached such an enormous scale in just its second year of operation, especially considering the decades-old precedent of government procurement, which crowded out the private sector instead of fostering it,” said Luke McCarthy, IFDC input voucher specialist.

So, one might say that the FG not only has the sheer will to transform the sector, it also has a plan. The GES program and other market-led efforts are putting Nigeria on track for substantial agricultural transformation. “We ended the approach of treating agriculture as a development program,” said Adesina during the 36th Session of the IFAD Governing Council. “We now treat agriculture as a business to generate wealth for millions of our people.”

The system is working. According to the Minister, “In the past two years, the system has reached 6.4 million smallholder farmers and enhanced food security for 30 million persons in rural farm households. Women farmers-who never got fertilizers and seeds for decades under the old government system – now have better yielding fields with subsidized farm inputs they received on their own mobile phones. Dignity has been restored to farmers.

“The input sector agri-businesses are expanding rapidly. The number of seed companies grew from 11 to 77 within two years. Syngenta, Monsanto and Dupont, the three largest seed companies in the world, have committed to establishing seed companies in Nigeria due to our successes with the agribusiness approach. The success of the GES has led to the emergence of over 3,000 small and medium agribusinesses in input supply chain all over the country.

“Local fertilizer manufacturing and blending capacity has significantly expanded, with $5 billion in new investment. To fix the storage segment for all value chains, the Ministry of Agriculture and Rural Development attracted Blumberg, one of the largest manufacturers of warehouses in the world, to commit to using Nigeria as the regional hub for manufacturing warehouses in West Africa.

Nigeria have received a total of over US $4 billion in executed Letters of Intent (LOIS) for investments by /30 private sector agri-businesses and the FG have established relationships with over 150 agri-businesses in Nigeria.

To continue this trend in diversifying away from the unimodal oil and gas economy of Nigeria, and to build upon the investment inertia of the agricultural sector, there is need to engage the organized private sector to help drive regulatory and policy reforms; The Nigeria Agri-business Group was primarily launched last month for this purpose.

The Nigeria Agri-business Group is a high powered organized private sector group comprised of all value chain stakeholders, from the input suppliers to aggregators, food processors, marketers and consumers”. The group will help to ensure that the ongoing reforms of the agriculture sector are protected and sustained. They will also work closely with the government to improve further the business environment for agriculture.

In 2013, an independently conducted survey of 75 leading agri-businesses in Nigeria showed that they face serious challenge, including the following, by percentage of respondent: Infrastructure (72%); Financing (56%); Supply security (55%); Government regulations, tax and policies (53%). Other constraints included human capital (45%), security (39%), land (24%) and government coordination (19%).

The top 4 constraints are being addressed head-on by the ministry, according to the Minister through the development of the Staple Crop Processing Zones (SCPZs). The SCPZs are expected to add an additional 1.4 trillion Naira to the GDP of Nigeria. They will help to create 250,000 jobs across the country. Cargill, the world’s number one food company will be investing 33 billion Naira (200 million Dollars) to set up cassava-to-starch and cassava-to-sweetener manufacturing plants.

Four weeks ago, the SCPZ was launched in Alape, Kogi state. The Alape SCPZ is expected to become a centre of excellence in processing of cassava fresh roots into starch, sweeteners and sorbitol, to be followed by SCPZs in Enugu/Anambra, Lagos and River states.

To address the issue of access to land, the Ministry has been working actively with state governments to secure land for genius investors. The Ministry is also rapidly fixing financial value chains to support farmers, aggregators, transporters, processors etc.

In strategic partnership with the Central Bank of Nigeria (CBN) and the banking industry, we have seen the total bank lending to agriculture and agribusiness to grow from close to zero percent in 2011 to about 5% in 2013 (over N320 billion). And this is expected to grow 10% in five years. Because the Ministry fixed the agriculture value chains, for inputs and outputs, with agribusinesses, the default rate on the loans have been zero percent over the past two years.

According to Dr. Adesina, “A major challenge facing the agri-businesses in Nigeria is the multiplicity of directions and poor coordination on policies. Sometimes different agencies of government give conflicting signals.

“For example, we continue to receive calls on the lack of collaboration in the implementation of the zero’ duty on importation of agricultural equipment and machineries. Therefore, better government coordination is required to deal head-on with these perennial issues and challenges of policy implementation and lack of coordination between Ministries, Departments and Agencies (MDAs).

The Nigerian Agri-business Group can help in this area, by articulating the position of private sector agribusinesses on matters relating to policies, legal and regulatory environments. This group is expected to represent the interest of the value-chains from farm inputs to aggregation, storage and handling to food processors. The group is also expected to help with further leveraging of investments into the agricultural value chains. It is very important that the Nigerian Agri-business Group be independent and have its own corporate persona, to protect its integrity and those of a” the players along the agricultural value chains.

The launching of the Nigerian Agribusiness Executive Leadership Group is therefore a timely event. This group will help to move forward the agenda on agribusiness development in Nigeria.

With the leadership of Nigeria Agri-business Group, many observers have expressed confident that our food import bill, which has dropped from N2.3 trillion down to N1.8 trillion within the past two years, will continue to decline, as local production, processing and value – addition is encouraged.

If this pace of agricultural sector reforms is kept up and institutionalized, Nigeria will soon become a net exporter of food and a powerhouse in global food and agricultural markets.

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