I was invited by the FRANCO/NIGERIAN Chamber of Commerce and Industry in Nigeria on Monday 26th of March 2018 to deliver the keynote address on a subject dear to my heart with subject-AGRICULTURE: KEY TO SUSTAINABLE DEVELOPMENT IN NIGERIA and the thrust of my treatise centered on a Policy framework that recognizes the need for a structured Agricultural value chain anchored on Production, Processing and Storage and the need for this to be championed by the Sub-nationals better known as States in our current federating clime and the need to have consistent Agric policies not based on 4 year electoral cycles but something more long term and can help planning and investment particularly by the private sector.
Excerpts are reproduced below.
Distinguished Ladies and Gentlemen.
I want to thank the Nigeria /French Chamber of Commerce-Franco Nigerian Chamber for inviting me to deliver the key note at this all important breakfast session. As you might be aware, am a passionate Agri business practitioner who believes that the glorious years of the 60s 70s and 80s will return if we can just put in place policies that would endure and outlive 4 year electoral cycles then and only then can we have meaningful development.
To set the context, let me give a bit of a background and set the tone.
Nigeria has 84 million hectares of arable land and less than a third of that is cultivated. Nigeria possesses nearly 279 billion cubic meters of surface water, yet potential sources of irrigation from two of the major rivers in Africa – the Niger and Benue Rivers – remain unexploited. The country has about 14 million farming families with an average land area available per farmer is in the range of 1.8 hectares
The primary challenge at hand is how to increase agricultural productivity. Yields per hectare are only 20-50 percent of comparable yields in developing countries like Brazil, Indonesia, Thailand and Malaysia and this leaves much room for improvement. In terms of input, Nigeria has one of the lowest usage rates. Mechanization intensity remains low (perhaps 10 tractors per 1000 hectares compared to Indonesia’s 241 tractors per 100 hectares).
The Agricultural sector is also a major employer of labour, providing employment to about a third of the population but in the last 10 years budgetary allocation to agriculture has plummeted from about 5.41 percent in 2008 to a paltry 1.2 percent in 2018. These figures are not in consonance with AU-Maputo Declarations of Comprehensive Africa Development Program CAADP which requires African countries to allocate at least 10% of their annual budgets to agriculture and achieve 6% annual growth in Agricultural GDP. It is no surprise therefore that Agriculture contributes less than 30% to Nigeria’s GDP. For a sector that employs a significant chunk of the labour force, more is expected.
Nigeria’s current Agricultural Policy framework is anchored on a blueprint titled Nigeria Agricultural Roadmap. This document developed by the Federal Ministry of Agriculture and Rural Development (FMARD) seeks to build on the successes of the Agriculture Transformation Agenda (ATA) and to further accelerate development and growth in the sector. It seeks to engender domestic food security and build a healthy base for agriculture export. In achieving these objectives, the government expects to prioritize improving productivity into a number of domestically focused crops and activities and prioritize for export markets the production of the following crops and activities: cowpeas, cocoa, cashew, cassava (starch, chips and ethanol), ginger, sesame, oil palm, yams, horticulture (fruits and vegetables), beef and cotton. It will then periodically publish metrics to track performance against the strategy e.g. tonnage of rice paddy produced, or yields/milking cow. This I think speaks partly to the issues that have constrained improvements in agricultural productivity in Nigeria but it needs to do more.
The bane of Nigerian Agriculture in my view is a lack of a structured value chain that speaks to our production, processing and storage capabilities. As I have often alluded at different fora, for Nigeria to be competitive we must play to our comparative advantage. For Agricultural development to thrive and be impactful, we must devolve to the Sub-nationals herein referred to as States and Private sector players and leave the Big Elephant the Federal Government to concentrate on enabling environment as per policy framework.
In driving this, State Governments must identify critical success factors that will drive the process and enable same. A few that come to mind are Policy and Regulatory framework, Land Access, Infrastructure, Security, Finance, Inputs and Market Access.
Let me examine them one by one. On a consistent basis, a framework that guides and supports the Agriculture value chain is most times lacking by the sub-nationals as the Federal government over centralizes policy and the states cannot seem to extricate themselves from this shackle and more often than not policy flip flops are prevalent and states do not punt their competitive and comparative strengths.
Land is a major issue as legally all Land belongs to the government whether federal or state and even when accessed getting certificates of occupancy is a major issue and this power is vested in the governor who most times does not deem it fit to delegate same to say the Attorney General or the Commissioner for Lands. Community issues also are a recurring decimal and act as clogs in the wheel and preclude you from doing anything meaningful on the land after payment.
Infrastructure is a sine qua non, as critical infrastructure like access roads, power/energy are often lacking and states expect you to put all this in place. Farming should be all year round and as such irrigation is critical and the states should take advantage of the dams and River Basin Authorities and this where synergy with Ministries of Water Resources and Agriculture is important.Government providing Agric clusters that already have these in place will attract investors in the value chain as production costs will be marginal and returns will be worthwhile.
In this era of insecurity across the entire clime, States face a huge challenge with investors monitoring the security barometer to measure whether these states offer a safe haven for the business of Agriculture. Hitherto some states have served as hotbeds of communal clashes, herdsmen attacks and other sundry security challenges that discourage investment. The issue must be thoroughly tackled and holistically through forest rangers this time not for game but for farmland.
Finance and proper funding of Agriculture and the respective aspects of the value chain is desirable and states must not pay lip service to it. Micro credits and low and single digit interest rates from intervention funds offered by specialist banks abound and should be encouraged.
The Anchor Borrower Programme a policy initiative by the Federal Government designed to support smallholder farmers by providing them with the requisite training, tools and funds at single digit interest rates which will enable improved cultivation of key agricultural items such as maize, soybeans, rice, cotton and wheat is an example of one such initiative.
Two years into the implementation, the programme has contributed to the creation of an estimated 890,000 direct and 2.6 million indirect jobs. The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has put the total amount of money disbursed to over 250,000 farmers under the Anchor Borrower’s Programme (ABP) in partnership with state governments at N55.526 billion.
Agricultural inputs are a necessary ingredient in revolutionizing the Agricultural sector of any country Fertilizer availability and proper usage as well as provision of right quality seeds that would ensure the right yield as well as herbicides and pesticides for crop protection. Capacity building in the form of Research and Development by Research institutes should be encouraged. Most states have them in abundance but funding is an issue and as such they do not attract the right quality of personnel. Specialist institutions like Universities of Agriculture should serve as Centers of Excellence and fountains of expertise.
Lastly, Market access for crops grown and processed Produce should be guaranteed by the state governments who can take excess production and store in silos as part of their Strategic reserve. The federal government should use the states to achieve this. Farmers want to know they have a ready offtake for their crops either by the state or the investor in the value chain. And this is where the private sector comes in.
I will now seize this opportunity to bring into relief what an enabling Agric ecosystem does for investors who do not come with a briefcase or portfolio mindset and not better example to site than that of OLAM.
Olam is one of the biggest players in Nigeria’s Agri-business space, but has very humble beginnings in Nigeria from1989 and has grown to be a global behemoth based out of Singapore with presence in over 70 countries 25 of which are in Africa. In Nigeria, the Olam Group has invested over a $1billion dollars in the Agricultural value chain space and still counting. Some have asked why has Olam been so successful in an area that many others have either failed in or been too scared to invest in. I give them the very simple answer, They are not afraid to dare and their model and perspective on how to successfully do agribusiness in Nigeria is-‘’Have a long term view and adapt to local peculiarities. Olam was born in Nigeria and believes in Nigeria.
In the past 29 years, Olam Group in Nigeria has expanded from cashew into cocoa, sesame, Groundnut, soya, rice, wheat milling, biscuits, confectionery, dairy products, noodles, beverages and kitchen ingredients such as tomato paste and seasoning. Olam’s success in Nigeria has been based on delivering value to farmers, customers and consumers through best in class operational capabilities and a long-term commitment to develop Nigeria’s agricultural supply chains. They have created approximately 7,300 direct jobs, supporting over 500,000 farmers, with its 12 branches, 6 entities, 18 factories and 1 Rice farm and mill in Nasarawa. They operate from seed to fork.
There are few areas of investments in Nigeria that are as catalytic as Agriculture. This is especially true when this investment is done with a strong focus on social impact.This is a development model that works. This is capital with a human conscience. Most importantly, i think this should be the context for agriculture in Nigeria’s long term socio-economic sustainability.
Economic opportunities provide a rallying point for national integration. This expectation is also an opportunity for cohesion and national development. Agriculture value chains run across the length and breadth of Nigeria and by deepening these economic relationships and linkages we provide an opportunity for national rebirth. This is why we cannot talk about economic development in Nigeria without strongly considering the huge role agriculture plays
Thank you for your kind attention.
Ade Adefeko is the vice-president, corporate & government relations, OLAM Nigeria