By our Reporters
The Nigerian agric sector has the potential to generate trillions of naira in revenue and this is reflected in the N1.1 trillion food deficit as at 2018.
Transforming this potential into actual productivity requires more than the N500 billion total lending to the sector which contributes 25 percent of the nation’s Gross Domestic Product (GDP) and generates 48 percent of total employment. But there are risks, majorly due to natural disaster and infrastructural challenge across the country-which undermines the attractiveness of the sector to attract the necessary investment to unlock its productivity.
However, given the vital rose of the agric sector in the nation’s economy, especially its employment generating potential, Vanguard in partnership with Ecobank in, last week convened an agribusiness summit, attended by leading experts in the agric business value chain and from the financial sector, with the aim of proffering measures on how to unlock the productivity potentials of and investment opportunities in the agribusiness space.
Notable participants at the summit include the Minister of Agriculture & Rural Development, Alhaji Sabo Nanono as Special Guest of Honour, represented by Mustapha Shehuri, Minister of State in the ministry; Dr Andrew S Nevin, Chief Economist and Partner, Financial Services Sector, PwC who delivered the keynote speech. Other speakers and panellists are Patrick Akinwuntan Managing Director/Chief Executive Officer, Ecobank Nigeria; Abdulhameed Aliyu Managing Director/Chief Executive Officer, NIRSAL; Mr Emmanuel Ijewere Vice President Nigeria Agribusiness Group (NABG), Ayodeji Balogun, Country CEO AFEX Commodities Exchange amongst others. The following are presentations and recommendations from some of the experts who spoke at the summit.
Agriculture needs the intersection of physical technologies with digital technologies — Andrew S. Nevin
Official data shows that agriculture contributes 25 percent to Nigeria’s GDP and 48 percent of the employment. This tells you that agric is not as productive as other parts of the economy. We are not getting the productivity out of agriculture that Nigeria is capable of.
The fallout from this is that we are importing more food into Nigeria than we export. In fact Nigeria, from official figures, imports almost five times of food as it exports.
For instance, in 2018, food imports into Nigeria were valued at N1.4 trillion while it exported N302 million worth of food, indicating a deficit of about N1.1 trillion. So we are importing almost five times as much as we import food. That’s the gap that has to be closed by all the players in the agriculture value chain space.
Need to de-risk agribusiness
It’s risky to be a farmer. So any agriculture system that works for the country and for the farmers has to have some de-risking mechanisms for the farmers.
“Technology is critical. Agriculture needs the intersection of physical technologies with digital technologies, with drones and artificial intelligence (AI) for example. I will like to encourage the conference and the industry to keep driving forward on the use of technology in agriculture.
The reality is that Diaspora is holding up the Nigerian economy. Over 60 percent imports are financed by Diaspora remittances. I don’t think it’s too much to say that if we didn’t have Diaspora financing in Nigeria, the economy will collapse.
A lot of the Diaspora wants to invest in their states of origin in viable projects. So if we can create viable projects in those states, in agriculture, there are investment dollars available.
Officially, at least 55 percent of Nigeria’s economy is in the informal sector.
How does this matter to agriculture? The informal sector is less productive than the formal sector. And it is harder to get investment in the informal sector.
So, one requirement in order to make economic progress is to move people from the informal sector into the formal sector. But you can’t force people to move into the formal sector. Why do people stay in the informal sector? Because, it’s complex and complex to be in the formal sector, you look at the multiplicity of taxes, multiplicity of regulators, some people choose to stay in the informal sector. But to make progress, particularly in agriculture, we need to find ways to make it simpler to bring people into the formal sector.
So, there must a concerted effort focused on bringing the informal sector into the formal sector of the agricultural value chain.
Nigeria must take its rightful place as leading agro-economy in Africa- Patrick Akinwuntan , CEO, Ecobank Nigeria
We all know that agriculture is indeed absolutely practical and agriculture is big business. History tells us that the first job or employment of mankind was tilling the soil so agriculture is clearly the oldest profession that has sustained humanity till date.
“For us in Nigeria, agriculture used to be the lead of the economy before the discovery of oil and in the last few years the government has paid significant attention to reposition the agribusiness sector as the corner stone of our economy once again.
“Be it at all levels of government, in particular our regulator, the Central Bank of Nigeria, various initiatives and platforms aimed at creating the right incentives and environment for agribusiness to thrive has been put in place and that is why for us at Ecobank, as an institution founded to integrate the economies of Africa, it’s just right that we take the risk in bringing together players within the agric sector to actually put together a control platform to actualize our dreams in this respect.
“Recently, we signed a memorandum of understanding with NIRSAL, and Ecobank Nigeria pledged a commitment that over the next three years, we have an agric fund of N70 billion that is available for supporting the Agribusiness sector. As at today, we already supporting the agric sector at more than 10 percent of our loan portfolio and that is almost close to a N100 billion as at today.
“We believe that for a country of about 200 million people, for a country that is the leading economy of Africa, and recognizing that we have a lot of countries in Africa and agriculture as the number one contributor to the economy and with the coming of the Africa Free Trade Agreement, it is actually critical that Nigeria takes its rightful place as the leading agro economy in Africa.
“You will recall that two or three years ago the country also announced the financial inclusion plan. For us at Ecobank, we see the convergence because agric is the one business that is available at every nook and corner of our country and Ecobank has been a leading player in driving financial inclusion both in Nigeria and across Africa. We have built the necessary platforms that ensure that everybody can participate in the financial inclusion system.
The whole idea is to bring banking to the grass root and we believe firmly in Ecobank that food security and financial inclusion are fundamentals for national security. They are fundamentals for galvanizing the economy and that is why we have gathered here today to create the opportunity to interact. It is about the entire agric value chain. It is not just about producers or consumers it is up to the infrastructure, enabling environment, the ability to compete effectively both for quality and value within the country and positioning the agribusiness as a major export potential for the country.
Smallholder farmers hold the key to agric productivity — Abdulhameed Aliyu, CEO, NIRSAL
The link between productivity and investment is key. Without productivity and investment there would be no financing, there would be no investment. You can do agriculture if you like, except you convert agric from culture to agric as a business with the rules and logic of business, you can never be able to get private sector financing into Nigeria agricultural opportunities.
Therefore, whatever conversation we are going to have, you must talk of productivity; convince the banks that your business is productive enough to attract money. It is becoming a cliché already that we have land, water, labour and market. Nobody eats potential; you have to apply human effort and investment to that potential to economic reality.
We have land, but a large part of the arable land we have is dead asset, so you cannot convince Ecobank to put N70 billion into a dead asset, you have to bring life to that land as a dead asset. Up to a few years ago, it was said that the total food import into Nigeria was $22 billion, at that time, African food import base was $35 billion according to African Development Bank. Imagine Nigeria alone having $22billion of $35 billion. Thanks to policy shocks, this administration and the alignment to create fiscal and monetary policies in this country. You could see very aggressive action by the CBN supported by the Federal Government to ensure that we eat what we grow and grow what we eat.
This $22 billion opportunity is for us to take if we could do it right. By 2025 it has been estimated that Africa is going to import up $110 billion worth of food feed and fibre.
Incidentally, we have just found the AfCTA which makes this market available to Nigeria if we could do it right. Across the world, due to rapid population growth, it is understood that the entire food and agribusiness industry in the world is worth $5 trillion.
We in Africa can convert those things into opportunities for us to take. If we can get it right, we can supply Brazil and Argentina, starting from been commodities to consumption centres of the world, the factors of production is in our favour.
The modern-day financing agriculture is not really financing agriculture but financing agribusiness.
Every commodity we produce in Nigeria can be broken into business. You cannot do successful agriculture without financing the upstream, midstream and downstream. We advised the bank to create the loan but also find out where the money is going to. Finance capital cannot work until we are able to create technology capital, equipment capital and brain capital.
Our young people must be able to study agribusiness and be able to do project management to be able to deliver on projects. That way it is easy for us to get the money. Finance capital can enable a lot of things to be acquired; we don’t have to wait all our life time to acquire these things. Technology has no border, equipment capital has no border, brain capital has no border.
All finance and investment facilities must be facilitated by increase productivity, every commodity you must work with to get money and financing must have a market-driven approach, it must have a demand established, price, quality and quantity must be determined.
All our activities must reflect small holder agric farmers because that is where the hope of Africa lies. Corporate agriculture would not work for us, otherwise you would find a small island of prosperity is surrounded by huge sea of poverty.
NIRSAL is trying to ensure every state capital in Nigeria with a taste for fresh foods and vegetables, there is control environment for agriculture. Control environment to chill fresh food, imagine young people across the country having greenhouses for vegetable products in the country a day and serving the market.
That is the future for young people. Agribusiness is driven by technology. House is a dead asset but farm can produce yearly for life, if the soil texture can be maintained. Our intention is to create landbanks whereby a landbank of five, ten or 20,000 hectares of land owned by high net worth individual. Agric is not a hobby, it is business.
Hand it over to the landbank to handle for 20/30 years and get steady income from the land developer who would clear the land and parcel it out put irrigation and have productivity going on. Every Nigerian would benefit from it. Give your land and make money. To de-risk agriculture in Nigeria, you got to leverage the latest technology of geo mapping infrastructure and comprehensive mechanized agriculture.
Communication between policy makers and operators necessary to drive productivity — Emmanuel Ijewere, Vice President, Nigeria AgriBusiness Group
There is a huge gap between the private and public sector. The public sector takes the decisions, while the private sector is the player.
There is little communication between both parties, some people in Abuja sit down and proffer solutions, they cut the farmer’s hair without the farmer being present.
I will also say this, private sector operators need to talk to themselves more. This is not criticisms to Ecobank, because that is what happens everywhere we go. Now we do believe that this kind of summit cannot hold unless we bring in the Minister of agriculture.
The Minister of Agriculture is a policy maker for the country, the actual players, the most important people are those who invest their money, invest their lives, invest their future, those politicians who come are given an office and that is the end of it. They go to all the best conferences in the world and at the end of the conference, the materials end up in the files nobody ever gets to see it.
So having said that and I believe I have to say it because I came to agriculture from my previous world.
About 18 years ago between that time and now nothing has improved. It is a very sad experience. These kinds of conferences are held, and they are beautiful, I must have attended over 200.
If not for the influence that Ecobank has on me maybe I should be sleeping at home and wonder how the conference is going. But the truth is that we should start telling each other the truth, those two papers have proffered the solution. How are we implementing it?
You must have the courage to tell government, if it is through the Bankers Committee, tell them the truth. You bankers contributed five percent of your profit, where are the billions today? Were they used to grow agriculture? These are issues, so I challenge you on that.
In 2003, I was lucky enough to break off from accounting and went to agriculture and one of the first things I venture into was meat business, because the abattoir in Oko-Oba (in Lagos state) was an absolute eyesore, a shame and a disgrace to Nigeria; and that time Lagos State government was trying to do something about it, but they had a lot of political drawbacks.
So I decided to set up one (abattoir) that is a modern one. That has gone through all kinds of challenges, when we started diesel was N9 per liter, today you know the price of diesel. The price of meat has not gone up by the same level and we have to run three generators, one 12 noon to 12 midnight, 12 midnight to 12 noon and the third one stand by, because immediately you slaughter a cow you must keep it preserved at a particular temperature, therefore you cannot afford your cold rooms to be down.
We bring the cattle from the north, but then we have also in recent times set up a number of fattening stations. We are trying to start one in Lagos because of the real issues involved in logistics.
The cow that leaves say Kaduna with a weight of 430 kilogram arrives Lagos three days after at 360 kilogram and then you now have to fatten it to bring it up. Those ones that have done the trekking from Kaduna to Lagos, they would have done well at the last marathon we had in Lagos.
Now that is the first challenge, number two, what we also discovered, and the truth is this, a large majority of the cow that are slaughtered in Lagos have one disease or the other, and Lagos State has been working very hard using its own Vetenary doctors to do this, so that is a challenge that is being determined.
But those logistics of bringing them gave us the opportunity of actually seeing how these cattle rearers behave and so on.
It’s now been so fully politicized that the truth about cattle headers is no longer being told. One is even afraid to tell what we know because it has been overshadowed by the politics involved in it. And what we learnt was these people were very simple, they were not crude people who talk to each other on how to attack villages and so on.
That is not within my competence because I have been over ruled so I will keep quiet. I just pray that God comes and does the right thing, but what I do know is that a number of people are cattle rustlers who are very sophisticated, many of them came from Europe and America they took over the entire scene and nobody was able to challenge that.
The cattle rustlers took over all these atrocities that are happening for money, that is a story for another day. What is the situation in Lagos, in Lagos today as announced in the pages of the newspaper my company has gone into partnership with FarmCrowdy and that also gave me the opportunity of being a Director in FarmCrowdy and thank God that Lagos State has been very encouraging.
We intend to have meat shops all over Lagos, so that when you buy beef you know what you are buying. But again there is the issue around transportation. We tried to use the rail system we got this railconnect, we entered a contract with them. They supplied us the first batch of 1,820 cows, but 20 died in between.
And when they were being brought down at Ijokoro 11 of them broke their legs, because there was no platform, because of the stress of bringing them to my place we lost another 11 cows, tell me where the profit is in all these?
These are the practical things we went through, the same thing happened to tomato, I bring tomato by rail twice, the first time tomato arrived at Iddo with 800 crates, it arrived fully cooked, water was dripping all the way, why, because Nigeria Railway Corporation sealed it all up, no air-conditioning.
The second consignment arrived, they put windows on them, but at Lokoja there was a derailment, the train had to stay there for four days, and the time it arrived here again, we got only four crates out of 800 crates. That is the situation that we are facing now.