ICYMI: First phase implementation of Nigeria’s $210m SAPZ project unsatisfactory, says AfDB

The African Development Bank (AfDB) has described the overall performance of the first phase of Nigeria’s $210 million special agro-industrial processing zone (SAPZ) programme as “problematic”.

AfDB, in its recent ‘Implementation Progress and Results Report (IPR)’, said the project, coded P-NG-AAA-002, has an unsatisfactory rating.

The bank announced in December 2021 that its board had approved a $210 million loan to co-finance phase one of Nigeria’s SAPZ programme.

The amount comprised $160 million from the AfDB and $50 million from the AfricaGrowingTogetherFund.

The bank said the programme would unlock Nigeria’s agricultural potential and drive industrialisation by developing strategic crops and livestock.

Specifically, the first phase of the project is designed to focus on seven Nigerian states: Ogun, Oyo, Imo, Cross River, Kano, Kaduna, and Kwara, along with the federal capital territory (FCT).

According to the bank’s latest report, the overall performance of SAPZS-I has been relatively slow since project approval, particularly regarding project disbursement.

“The procurement of supervision consultants for the Design, Build, and Operate (DBO) contractors is currently at the Request for Proposal (RFP) stage for Kaduna State and at the Request for Expression of Interest (REOI) stage for Oyo, Imo, and Cross River States,” the report noted.

“DBO bidding documents have been cleared for four states: Kaduna, Cross River, Oyo, and Ogun. Kaduna has already advertised its DBO.

“All these will result in improved implementation, disbursement, and ratings in 2025.

“However, the overall performance status from the time of project approval to date remains relatively slow, especially with regard to disbursement.”

KEY ISSUES AFFECTING IMPLEMENTATION

The bank identified weak capacity at the state project implementation units (PSIUs) and the national project coordination unit (NPCU) as key issues affecting project implementation while noting corrective measures outlined in the report.

“Handholding support to both national coordinating office at the federal level and PSIUs in terms of financial management, procurement processes, environmental and social safeguards, etc., reinforced by regular technical workshops on Bank fiduciary requirements,” the report said.

“The Bank has also provided an additional two experienced consultants to backstop and handhold the project staff on the implementation of project activities.”

IMO ADVISED TO START ACTIVITIES TO AVOID LOAN CANCELLATION

The report identified delays in implementing Imo state’s activities, stressing the need to rework the service legal agreement (SLA) for Ogun as major risks causing project setbacks.

To address this, the AfDB advised informing the Imo government on the urgency of starting activities, warning that the bank could cancel the loan if there is further delay.

The bank said Ogun must provide an acceptable SLA, with both states required to meet a deadline of March 31.

For the project output ratings, the AfDB stated that key findings indicate that the project has suffered from effectiveness delays.

“Although approved on 13 – Dec – 21, project became effective on 17 – Oct – 23,” the report noted.

“First disbursements to states could only take place as they fulfil other requirements.

“Four States received their first disbursements by June 2024 (8 – 14 months after project effectiveness).

“The fifth State (Ogun) signed its SLA in October 2024.

“Procurement of major civil works (DBO contractors and supervision consultants) has commenced.

“Therefore, all activities that would contribute to achievement of outputs and outcomes are on track.”

The report added that project activities are progressing towards the commencement of major works execution, which will help the project achieve its intended development objectives.

On December 11, 2024, the AfDB announced that it had facilitated $2.2 billion in capital mobilisation for the SAPZ phase two project.