Nigeria Vision 20-2020 Mirage? (5)
In part 4 we continued our study of Alexander Chiejina’s report on the potential of agribusiness in Nigeria – “Unlocking Nigeria’s Agribusiness Potential”. Chiejina proceeded to cite Leah Gatts, an analyst with Consultancy Africa Intelligence, who pointed out that the Nigerian market is not easy to penetrate because the political and investment environment is a challenge to potential entrepreneurs.
While land tenure creates another obstacle, Gatts noted that in some states, land rights are tightly regulated and can be difficult to obtain for non-indigenes: “Land tenure reform is indeed one of the key areas that government should focus on as a way to attract more investment and encourage great confidence in a sector like agriculture. Export incentives for the manufacturing sector, which include the prohibition of certain imports as a way of encouraging local production, are also in place”. Gatts also argues that insurance geared directly at agriculture can help to dilute the risky nature of the sector (weather and pests) and defend against uncertain political environments (expropriation).
Coverage in case of expropriation and termination of contract is an especially useful development that can help inspire investor confidence. Chiejina argues that for agribusiness to make its desired impact there is need for agro-processing activities to move away from primary, farm-based processing activities to a stage of secondary and tertiary levels of processing. This will require that agricultural growth must first be stimulated to provide ready raw materials sufficient for sustainable operations of processing firms which will operate during and out of season of the agricultural cycle.
The 2012 UNIDO report noted that local, regional and international markets can only grow if the products of agro-processing are competitive and possess qualities demanded by the discriminating markets in and outside Nigeria: “Public investment in infrastructure and promotional activities are essential. Nigeria’s upgrading and modernising agro-industry should be based on the following cardinal points and processes: modernisation, intensification and development of appropriate production systems and farm organisations; support for and assurance of producers that public policies will be consistent, durable and progressive; deliberate promotion of commodity chains and agribusiness development; and institutional development.”
The UNIDO report further stated that for agro-industrial development, cluster development policy, involving agro-processing enterprises being located in specified areas and supported with shared infrastructure and facilities, is necessary: “Cluster strategy could be promoted entirely by the private sector through private-public partnerships (PPP) for processing and manufacturing of commodities predominant in an area, and focusing in clusters on producing for the export markets is recommended. Cluster development may take four main forms: industrial parks, industrial clusters, enterprise zones, and incubators… [Presently,] these agribusinesses are distributed between the modern and informal sectors of the economy with the latter accounting for more than two thirds of the total agribusiness firms in Nigeria.
The concentration of agribusiness firms is in three industrial clusters, namely the Lagos-Otta-Ibadan axis, the Onitsha-Aba-Nnewi-Port Harcourt axis, and the Kano-Kaduna-Jos axis. Outlier clusters are Calabar-Uyo, Borno-Yola, Abuja-Nassarawa, Ilorin-Ogbomoso-Offa, and Sokoto-Gusau-Kebbi. In all, Lagos accounts for nearly 45 percent of all registered agribusiness firms, and the bulk of annual total output comes from there,” it stated. The report maintained that de-concentration policies have to be planned and then to emerge at local level by giving specific incentives: “There are two principal actors involved in evolving a sustainable agro-industrial development in Nigeria – the government and the private sector – while the consumers are also important in creating effective demand.
The capability of agriculture to grow at an anticipated annual rate of 10-15 percent has been laid at the foot of agro-industrial enterprises through value chain growth and expansion. Government is conscious of the enormous responsibility it has to shoulder in order to create an appropriate environment for increased agricultural output,” the UNIDO report added. As stakeholders believe that since government has decided to promote an increased production of selected commodities, those in high demand by agro-processing industries, the real challenge is to sustain the output levels in the long-run and ensure a continuous flow of raw materials to agro-processing plants, particularly the SMEs.
Strategic initiatives they request should be in place include expansion of farmland through facilitation of land acquisition and title holdings for agricultural production as well as the need for a review of the Land Use Act 1978 in order to promote commercial agriculture and to encourage new farmers to enter the production space. An example of this is the PPP initiative being observed on Zimbabwe farmers’ fields in Kwara State to promote modern production practices. Chiejina also cited Chinedum Nwajiuba, professor of Agricultural Economics, to wit, that with the current policy designed for the commercial agribusiness sector to quickly produce surpluses for domestic consumption and reduce import dependency and foreign exchange expenditure, there is still a huge rural population that will require agricultural policy support with a development focus: “In designing this policy, consideration should be given to the twin challenges of rising population in both rural and urban Nigeria and climate change.
There is need for further policy reform on inputs supply, technology improvements, credits and subsidies. The recently launched transformation programme seeks to support improved seeds and seedlings in particular. This support must not be diverted from agricultural use into non-farm uses”. All said and done, it is apparent that given the right policy direction, Nigeria can, in a short period of one to six years regain its 1960s dominance in agribusiness. Most importantly, agribusiness can be leveraged to wipe out unemployment in the short run while the country restructures its entire educational sector to prepare its youths for the new world that is run on technology particularly information and communication technology (ICT).
All that is required is a focused and aggressively driven government policy at federal, state and local government levels, albeit coordinated for maximum impact especially to ensure it benefits from economy of scale and comparative advantage as well as sensitivity to global relevance. This brings us to the end of our focus on agribusiness, under which we have grouped all agriculture related activities in Nigeria. Next week we shall continue our analysis of the economic potential of Nigeria by looking at another sector of the economy, automobiles.
