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Africa can feed the world says Adewumi Nigerian Agric minister

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Akinwumi AdesinaWhen Nigeria’s billionnaires start investing in agriculture it’s news, says Akinwumi Adesina – Nigeria’s Agriculture minister, who has also brought in a raft of state solutions to overturn the country’s crop deficit.

Something is stirring in the wide expanses of northern Nigeria, and it is not another Islamist insurgency.

“The governor of Kebbi State says because of the rice revolution they no longer count rice in hectares, they count rice in kilometres,” says Akinwumi Adesina, Nigeria’s minister of agriculture.

“In the north in 2012, we produced an additional 1.4m tonnes of paddy rice. Last year, we expanded that by an additional 2.95m tonnes.”

Though Nigeria still produces less than half the rice it consumes, there are signs of a turnaround. Adesina points to the N320bn ($2bn) gross contribution made by rice to the Nigerian economy as a sign that things are improving.

“We needed to begin to restructure the economy, to be less dependent on oil and to also begin to have equitable economic growth and prosperity in different parts of the country. And the sector that’s going to give you that is agriculture,” Adesina says.

Given the predations of militant group Boko Haram in the north, creating jobs and wealth in the area is a vital part of any peace-building efforts.

“We launched a dry-season farming programme, a first for the country. Today, the youth are busy,” says Adesina, who explains that the rice sector alone has created nearly 370,000 jobs.

Nigeria has kickstarted its agricultural rise with a mixture of ‘enabling-state’ solutions, such as de-risking agriculture for bank lending, alongside more nimble market-based methods.

A good example of this is the provision of fertiliser subsidies, something that the World Bank frowns upon. But by using a mobile-phone-based voucher delivery system, it avoids some of the problems associated with large state bureaucracies.

“It [the previous system] was corrupt, it was inefficient and it didn’t reach the farmers,” says Adesina.

“No more than 11% of farmers were getting the fertilisers bought and sold by government. It took us 90 days to dismantle a corrupt system of 40 years in Nigeria,” he continues.

Campaigners for transparency in Nigeria’s opaque oil subsidy system may wonder whether similar methods could be applied to the energy sector.

Nigeria’s former central bank governor, Lamido Sanusi, favoured these sorts of pragmatic solutions. Sanusi and Adesina educated Nigeria’s banking fraternity on financing the agriculture sector.

“What I cannot forget was the experience of a meeting in the Central Bank with all the bank CEOs and all the Chief Risk Officers at all the banks in Nigeria. I asked them: ‘How much money do you think you’re going to lose from lending to agriculture?’ They said 90-100%.”


Lending frenzy

In 2011, when the Central Bank of Nigeria started its innovative de-risking mechanism known as the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending, lending to agriculture was 0.7% of the banking sector’s total loan portfolio.

“By last year – 2013 – it grew to 5%. We expect it to be 7.5% this year, and we expect it to rise to 10% by next year,” says Adesina.

Small companies selling fertiliser, seed and other inputs have been major beneficiaries, with $53m lent to small and medium-sized enterprises in 2013. These had largely been shut out of domestic credit markets.

cultivated – just 10% of it with modern technology.

The government has removed import duties on agricultural machinery and is facilitating access to land in order to encourage investment.

“In the last two years, we’ve been able to attract $4bn of private sector investment commitments. Those range from those that are making warehouses, to seed companies, to fertiliser companies as well as juice manufacturing companies,” says Adesina.

In Taraba State in the north east, United States-based and Kenya-registered Dominion Farms has set up a joint venture with the T.Y. Danjuma Group that includes a plan for $40m in investment.

However, the optimism surrounding the project was dented this year by farmers protesting against non-payment of compensation for land.

In Nasarawa State, Olam is planning to invest more than $72m in a commercial rice farm, a fully mechanised project covering 6,000ha.

It will house a processing facility for milling 210,000tn of rice per year, making it the biggest project of its kind in Africa. Commodity trader Cargill is also setting up a 15,000ha cassava-processing project in Kogi State.

Adesina says that the actions of domestic investors are increasingly important.

“We have shifted people that have invested in oil and gas – even in the cement business – to diversify into agriculture. That’s a big thing, when Nigeria’s billionaires are going into agriculture,” says Adesina.

“As we speak [Aliko] Dangote is putting $2.3bn into agriculture, and he says he’s going to put $300m into commercial rice production and milling in Nigeria.”

Dangote is investing $30m in a tomato paste factory in Kano. Another tycoon, Tony Elumelu, has diversified into agriculture with a juice-processing plant in Makurdi through the Transcorp subsidiary Teragro.

Africa has the land

Policy-makers have the ambition to transform Nigeria from the second-largest importer of rice in the world, spending $2.5bn annually, into a producer that can rival the Thai rice export machine.

Adesina argues that the agriculture and agribusiness sectors in Africa will be worth $1trn annually by 2050.

He estimates that agriculture-related foreign direct investment in Africa will rise from $10bn to $45bn in just six years. The continent has one of the great global competitive advantages, Adesina argues.

“Africa has 65% of all the land left to feed nine billion people in the world by 2050. Nobody drinks oil, nobody smokes gas, but everybody needs food. Now Africa has the poten- tial to feed the world. That’s a huge asset!”

This campaigning rhetoric may presage a loss for Nigeria and a gain for the African Development Bank. Adesina is now one of the people touted to replace bank president Donald Kaberuka in May 2015.

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