Walking the walk in Nigeria’s agricultural sector

Nigeria’s food import is growing by about 11 percent per annum, with top imports including wheat, rice, sugar and fish. The last administration made many attempts to unlock Nigeria’s agricultural potential as the country contains 84 million hectares of arable land, of which only 40 percent is utilized. More alarmingly, only around 0.8 percent of arable land is even irrigated, compared to the 28 percent that is in Thailand. Although there are approximately 110 million young people in the work force, due to low wages for laborers in the agricultural sector, food production has largely been left to the elderly.

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 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 last administration tried to tackle this menace by establishing the Agricultural Transformation Agenda (ATA) under Dr. Akinwunmi Adesina, the current African Development Bank (AFDB) President. The ATA essentially called for people to start treating agriculture like a business by integrating food production, storage, processing and industrial manufacturing through value chains, focusing on sectors where Nigeria had a comparative advantage.

It also included plans to adopt import substitution measures to drive sector growth and investment-driven strategic partnerships with the private sector. Adesina’s major achievement and the hallmark of his tenure was the Growth Enhancement Support Scheme (GES) for fertilizer and seed distribution. This ended nearly four decades of corruption by eliminating direct procurement and distribution of seeds and fertilizer, enabling private sector seed and fertilizer companies to sell directly to farmers. As a database of around 15 million farmers was developed, along with an email wallet for input delivery, the need for middlemen was erased. Unfortunately, as it now stands, the previous administration ended up owing millions of dollars to fertilizer and seed companies.

Still, this policy should be continued, along with the Staple Crop Processing Zone (SCPZ) concept, which strives to boost import substitution and create wealth for farming communities. The SCPZ will enhance the development of rural farming neighborhoods through the building-up of modern processing capacity in agricultural production clusters. Through this process, farming productivity in such clusters will be supported in order to sustain processing needs and creating structured markets through organized linkages between farmers and processors. Thirteen such zones were to be created to absorb production in a scheduled manner and address the perennial problems of post-harvest losses. However, most have been created in name only, with minimal impact. It would be good for the incoming minster to fine-tune the SCPZs to fix these deficiencies.

In the area of financing, the government introduced the Fund for Agricultural Finance in Nigeria (FAFIN), which will serve small-holder farmers and agribusinesses and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NiRSAL), a Nigerian Central Bank single-digit financing framework for agriculture. The government also provided fiscal incentives to encourage domestic import substitution, including 0 percent duty on agricultural machinery and equipment imports, pioneer tax holiday for agricultural investments, duty waivers and other industry-related incentives to support the private sector. This should be improved as well because its impact so far has been minimal and is seen not to be inclusive enough.

In a nutshell, I would rate the last administration as average, but the current administration should endeavor to walk the walk and dwell less on the rhetoric and grandiose plans of their predecessors. The environment must be conducive to business as agriculture has a long gestation period and the government should be consistent in policy formulation and be an enabler instead of a participant in this endeavor.