The fundamental roles agricultural sector is expected to play in the nation’s national development have continued to be undermined by sundry challenges, thereby causing serious distortions in the economy.. As the new drive towards diversification of the economy gathers greater momentum, experts believe that if the current interest of foreign investors in the sector is properly harnessed through appropriate policy measures, the road to Nigeria’s sustained and balanced socio-economic development may have been charted. ABOLAJI ADEBAYO reports
For each country, there is at least a sector of the economy of which it has comparative advantage over others. And this economic asset, if efficiently utilized, could be a key resource required by a country for national development and global market competitiveness and macro economic stability.
Prior to the discovery of crude oil in Nigeria, agriculture was the mainstay of the nation’s economy until the individual and the government’s attention was shifted from the sector to the crude oil, which has since assumed the sole economic commodity of the whole country.
The neglect of the agricultural sector has made it unattractive to both local and foreign investors. Although farming is still practised in Nigeria but this is not really for the purpose of enhancing its contributions to the Gross Domestic Product, GDP.
Rather, it was left in the hands of the peasant farmers without adequate supports from the government in terms of finance, equipment, inputs and the like with the attendant negative implications for robust or balanced national value addition.
This did not only lead to the underdevelopment of the sector but made even food security a major challenge in the country as post-harvest saving facilities were lacking and farmers became poorer as the years roll by. The farmers’ losses took the form of low access to modern inputs, reduced outputs, low income, and high incidence of poverty.
Consumers also had to bear high cost of food and other processed products. The effects of the identified constraint on commercialisation and investment in Nigerian agriculture were low output/ productivity, high cost of production, low returns to investment, low level of investment, high price of agricultural products, collapse of businesses, insufficient working capital, low capacity utilization, poor investment climate, loss and or poor quality of products, poor economic growth, loss of invested fund, loss of confidence in the economy, excessive importation/ dumping of fake and substandard products, uncompetitiveness of Nigerian products in the world market, drudgery of farming, insecurity/violent, capital flight, destruction of natural production resources, and loss of biodiversity.
As a result of above effects, the private sector and the foreign investors were not encouraged to make substantial and sustainable investments in the Nigerian agricultural sector. The fall in the prices of oil and the need for diversifying the nation’s economy from a mono-based economy of oil and petroleum products seemed to have diverted the attention of both the government and individual investors to the economic advantage of the once neglected sector, hence, a persistent campaign for the reformation of the agricultural sector.
The reformation, which has given the sector a new economic look, making agriculture to be more of business than development instrument has continued attracting interests of more investors from both local and foreign countries. Recently, the interests of the foreign entities to participate in the Nigerian agricultural sector through investment in various aspects of the sector, especially in processing plant and manufacturing, have been on a surging trend.
Agribusiness experts noted that this remarkable turnaround in the Nigerian agricultural sector poses a great advantage as it stands to create multiplier effects in terms of job creation, food security and improved foreign exchange earnings for the country.
Before the reformation, it was observed that agricultural enterprises in Nigeria were fairly attractive to domestic investors while they were less attractive to foreign investors. An agricultural analyst, Taophic Mustapha, an agric engineer from University of Ibadan, identified 13 types of enterprises or economic activities worthy of investment in Nigerian agriculture.
These include input production, and supply, staple food crops, industrial crops, livestock, fishery, forestry, commodity processing, storage, agricultural commodity marketing, agroindustry/manufacturing, agricultural commodity export, and agricultural support services.
According to Mustapha, nine out of the thirteen enterprises were hardly attractive to foreign investors. He said that foreign investors were much more interested in in input production/supply of inputs, processing of commodities, and agroindustrial or manufacturing enterprises, all of which are downstream activities and highly capital intensive. He further noted that domestic investors were willing to invest in input production and supply, commodity processing, commodity marketing and agroindustrial/manufacturing.
He observed that the primary of upstream production activities seemed not to attract much investment interest from either foreign or domestic private sectors, saying therefore that the small-scale farmers would remain the main investors in the primary production subsector. He also observed that the areas of investment interest were based on regional differences across the country.
He said for instance, in the North-central domain, the economic enterprises of strong attraction are industrial crops, forestry, and agroindustrial/manufacturing enterprises, staple crop production is not at all attractive for foreign investment while livestock production and agricultural transport service are only weakly attracted.
In the Northeast, Mustapha noted that several agricultural enterprises have the potential to attract investment from foreign investors, which include agricultural input product/supply, livestock production, agricultural commodity processing, agricultural storage, agroindustry/manufacture, agricultural commodity export, and agricultural support services. According to him, the three areas fairly attractive to foreign investors in the Northwest domain, are input production/supply, commodity processing, and agroprocessing/ manufacturing.
In the Southeast domain, he said, four fairly attractive enterprises for foreign investment are input production/supply, industrial crop production (in particular oil palm and rubber), commodity processing, and agroindustry/manufacture.
He further said that industrial crop production, forestry, commodity processing, and commodity export always caught foreign investors’ attention in the Southwest, while local investors would be fairly attracted to invest in staple food crop production, industrial crop production, fisheries, forestry, and commodity processing enterprises.
“Across the country and enterprises, three main reasons stand out as accounting for the attractiveness of enterprises to foreign investors. These are a high level of demand for both primary and processed products, the availability of raw materials/ inputs, and a high rate of returns.
However, the huge capital requirement to begin a new business or run an old one is disincentive for domestic investors’ involvement in input production/supply enterprises and agricultural commodity processing. Similarly, land fragmentation is a major disincentive for domestic investors’ participation in forestry enterprises in both the Southeast and Southsouth zones.” he declared.
Meanwhile, the Chairman of all Farmers Association on Nigerian, Lagos State Chapter, Otunba Femi Oke, said the major factors setting Nigerian agriculture sector behind included lack of finance and infrastructure. He informed that many foreign entities are now interested in those areas to make their participation in the sector worthwhile while also creating conducive environment for all farmers including the local ones to explore the sector to the nation’s advantage.
According to Oke, some foreign investors just came to Nigeria last week to partner with the local stakeholders to render supports to the local farmers. Those companies, which were supported by the United State Department Agriculture, USDA, included Kiwi International from Atlanta.
Oke, who was appointed as the coordinator in Nigeria, said the firm would be supporting the farmers in the area of capacity building as it has budgeted huge amount of dollars to that effect. Fagrib is another company from Washington, according to Oke, which would take up the financial aspect of the sector by giving loans to farmers, while also embarking on capacity building for the farmers in Nigeria. Oke further informed that another foreign company, Grain Handler, has set to provide various farming machines to make the faring activities easier.
He said those machines include machines that can dry maize as well as sieve maize. All these companies came to Nigeria last week to formalize their involvement in the Nigerian agricultural sector with the government. In a similar development, a Chinese company, HellogJiang Pingyuan Rice Group, has unveiled plans to invest $300 million in rice project in Nigeria.
The Chief Executive Officer of the Group, Mr. Wang Jing Xin, disclosed this on Tuesday last week, when he led a delegation of the company to the Federal Ministry of Agriculture and Rural Development in Abuja. According to Wang, the company would start with 500 hectares of land and later invest 300 million dollars into agriculture in Nigeria.
The facilitator of the meeting, the Consul- General of Nigeria in China, Ambassador Ali Ocheni, said some states including Imo, Cross River and Akwa Ibom had shown interest in the proposal, which covers training of local farmers and transfer of technology, apart from making profits.
He urged the ministry to encourage other states to partake in the project to help Nigeria become self –sufficient in rice. Ocheni also disclosed the company’s intention to collaborate with the ministry in building a research institute, helping local farmers to improve themselves and equally providing job opportunities for Nigerians.
In his response, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, spoke on the need to take every step to ensure that other states in the country partner with the company on the proposed rice project, adding that an expanse of land earlier mapped out for rice production in Bayelsa State would be considered for the project. The Minister, who said Kebbi, Zamfara and Ogun states respectively could be encouraged to collaborate with the company, requested the company to consider the production of vegetables.
He also tasked the International Fund for Agricultural Development, IFAD, to devise a new strategy to accommodate the new programmes of the ministry. The Minister listed the need to minimize the conflicts between herdsmen and farmers, expansion of the value chains, rural sustenance, conversion of cassava leaves into animal feeds, industrial starch production and production of small harvesting machineries in cluster communities, among the requests of the ministry. He assured IFAD of the strong commitment of the ministry.
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