Transforming Nigeria’s agribusiness potentials into economic fortunes

Nigeria, apart from being blessed by large hectares of arable land, fertile soil, excellent climate for growing crops and low labour cost, is also said to have an advantage of about 70 per cent of its population working in the agricultural sector.At the moment, agric sector contributes 47 per cent to the country’s Gross Domestic […]

Nigeria, apart from being blessed by large hectares of arable land, fertile soil, excellent climate for growing crops and low labour cost, is also said to have an advantage of about 70 per cent of its population working in the agricultural sector.
At the moment, agric sector contributes 47 per cent to the country’s Gross Domestic Product (GDP) and is responsible for 10 per cent of its export earnings.
Foreign direct investment inflows are currently at $6.1 billion and the GDP is growing at a rate of 7.71 per cent, making Nigeria the fastest growing economy in Sub-Saharan Africa as well as placing Nigeria among ‘top 20’ economies in the world.
Nigeria is the largest Sub-Saharan African country that is producing fresh produce and perishable goods.
There is significant and growing demand by the EU to import more perishable goods and this market could be a dominant one for the country once the agricultural sector is in a position to export more goods.
The federal government, through various initiatives, has highlighted crops such as cassava, tomatoes, rice, cotton, fisheries, maize and cocoa that can enhance agricultural produce in the country.
The domestic and global demands for these crops are increasing and providing an excellent investment opportunity for stakeholders.
For instance, the global market for cassava is vast and is still growing as cassava can be used for chips and its remains can be processed into pellets which could contribute to animal feed and energy production.
The global market for both cassava chips and pellets is approximately $1 billion and has grown at 20 per cent per annum.
Investment wise, with a start-up of N525 million and a 115,000 tonne cassava input mill, there would be an estimated internal rate of return of 19 per cent and could break even after 4 to 5 years.
Investors will benefit from the country’s renewed focus on this sector and the potential to participate in assuring food security both in Nigeria and beyond.
Speaking in this regards, an agricultural researcher and Chief Executive Officer of Laj Nigeria Enterprises, Dr. Olanrewaju Jimoh, noted that the international community has recognised that investment returns in Nigeria are high and various donors and organisations investment is booming in agriculture sector.
Jimoh explained that the various initiatives such as Nigeria’s agricultural transformation agenda, Nigerian incentive based risk sharing system for agricultural lending, NIRSAL, enhancing financial innovation and access, EFInA, and Nigerian strategy support programme, NSSP, were created to boost Nigeria’s agriculture sector as well as to attract investors and develop participation of the private sector.
Jimoh disclosed that the goal is to increase agricultural output by 160 per cent, that is, from $90 billion in 2011 to $256 billion in 2030.
According to him, through the aforementioned initiatives, Nigeria is illustrating its commitment in achieving its Millennium Development Goals of eliminating poverty and promoting food security.
He said: “The key crops identified are grown in areas best suited for producing high quality products. For example, cotton production is more in the Northern part of the country and in states such as Zamfara, Katsina, Kano, Jigawa; while maize production is in central Nigeria and in states such as Niger, Kaduna, Bauchi, Gombe and Borno; and cassava and cocoa production is done more in the Southern part of the country in states such as Ogun, Lagos, Osun, Ondo, Edo, Enugu, Ebonyi, Kogi and Anambra.”
He explained that despite the advantages of these initiatives, there are some risks that need to be considered such as the political, economic and technological risks.
Jimoh noted that markets could become restricted or limited because of government involvement, adding that terrorism is also a concern as it greatly affects the business, especially in the northern parts of the country.
He said: “There have also been reports earlier this year of ships being attacked by pirates off the coast of Nigeria and Benin. This is problematic as it affects trade in the Gulf of Guinea. However to reduce this risk, Nigeria and Benin must take take in joint naval patrols.”
The agric analyst informed that the prevalence of poor infrastructure, especially road network, hinder the economy’s growth.
Jimoh added: “Poor irrigation facilities could also limit the agriculture sector to be the most productive only in wet seasons. It is worth noting that Adesina, the minister of agriculture in Nigeria, has allocated N60 billion to the improvement and development of irrigation systems.”
On limited technological access in the agric sector, Jimoh said: “There is limited but improving access to technology. This could impact research potential and the improvement of seeds in the short term and potentially have implications for relations with farmers and farmers associations.”
He said, however, the federal government is aware of the risks and is working hard to implement the initiatives.
Jimoh, however, opined that the initiatives appear to be created by an organised and determined government, who plans to make Nigeria self-sufficient by 2015 and export 80 per cent of its total output.