The document discusses challenges facing Nigeria's agricultural sector and strategies to unlock investment opportunities. It notes that agriculture accounts for 23.1% of GDP but Nigeria depends on food imports due to challenges including lack of access to finance, markets, and inputs. It recommends a comprehensive strategy focusing on developing value chains from smallholders to large farms. Key pillars include innovative subsidies for farmer inputs, staple crop processing zones to attract agribusinesses, and marketing corporations to replace outdated boards and create markets. Risk-sharing mechanisms and specialized funds are also proposed to increase financing for agriculture.
2. Introduction
The Nigerian Agriculture sector is said to
account for about 23.1% of the country’s
GDP and employs about 38% of the working
population. However, the sector has not being
faring well given the fact that the country has
been unable to feed herself, but rather depend
largely on food importation. This no doubt, has
a lot of negative implications for the country.
It is sad to say that a country with vast arable
land can’t produce enough food to feed herself
because of several challenges which she can
effectively tackle.
3. Challenges
Nigeria’s agricultural sector faces two
main challenges: lack of
competitiveness with global production
systems, and low diversification of
output. These challenges are amplified by
a number of structural and institutional
factor
4. Challenges
• Lack of access to low interest finance
• Lack of access to land titles and ownership of agricultural
investments
• Lack of access to equitable market opportunities for both producers
and processors of agricultural goods
• High rate of post-harvest losses
• Poor extension services for improved farming methods and
agribusiness practices
• High exposure to shocks and stresses from conflicts and climate
change
• Low access to farmer inputs – high quality seeds, fertilizer and
pesticides
• Cheaper imported food products
• Poor access to modern equipment and mechanization services
• Inadequate attention to the needs of women and youth who work in
the sector and who make up more than half of its workforce
• Weak institutional capacity in both the public and private sectors to
work together to grow the sector
5. Issue Statement:
How can a large country like Nigeria with her
vast arable land and market tackle its low
agricultural productivity?
What are the challenges that must be addressed
to promote the development of the sector?
How can or should she unlock the investment
opportunities in the Nigeria’s agricultural sector
and attract private sector funding?
6. Challenges:
Nigeria has both structural and
institutional challenges with its
agricultural sector including access to
finance, land title, markets, postharvest
issues, etc.
7. Strategies to unlock the
investment in the sector
Seven pillars required to unlock the sector:
1. Adopt a Value chain approach
2. Promote access to farmer inputs through an innovative
strategy
3. Initiate Staple Crop Processing Zones
4. Establish Marketing Corporations
5. Promote Access to Finance
6. Re-vitalize the Nigerian Commodity Exchange (NCX) to
fast-track exports
7. Improve inventory management/storage capacity at the
national and sub-national level
8. Change Agenda
The Nigerian Government should emphasis its
development agenda by promoting agriculture. This can
be achieved by putting in place a comprehensive
strategy for Nigeria’s agribusiness with specific focus
on value chain development.
9. Foundations of a Change Agenda
for Agriculture
An Agricultural policy should be designed from
the ground up to address all the challenges
listed above. The policy direction must support
the development of businesses along the
agricultural value chain, from smallholders on
less than a hectare of land to large
commercial ones over thousands of hectares
10. The Value Chain approach:
A system that identifies opportunities
for value addition and commercial
opportunities in the development of foods
from the farm (production) to the table
(consumption).
11. Innovative subsidy to farm inputs
This system would help to provide targeted support
directly farmers and participants across the agricultural
value chain. The system should be conceived to
capture the database of smallholder farmers in the
country with location, size and type of crops grown on
farms. We need an innovative system that will help
eliminate rent-seeking middlemen and wholesale
corruption in the subsidy system.
12. The Staple Crop Processing Zones
The Government should initiate or promote the
use the SCPZ to attract private sector
agribusinesses to set up processing plants in
zones of high food production, to process
commodities into food products. This will
enable Government gain by putting in place
appropriate fiscal, investment and infrastructure
policies.
13. Marketing Corporations:
These should be a private sector driven
institution, focused on specific value chains
and designed to replace the old marketing
boards, with the aim of guiding the growth of the
sectors. Unlike the Marketing Boards that set
artificial prices for cash crops, these
Marketing Corporations will create markets for
the food produce and transfer the value created
to the farmers. Such Marketing Corporations
should be developed for cassava, cocoa,
cotton and grains among several other key
agricultural produce or products.
14. Put in place risk mitigating
mechanism
There is need to increase the flow of financial
resources to farmers to scale up their
investments along the value chains.
Agribusinesses require a low interest regime to
thrive. Hence, the current focus is on utilizing
risk-sharing mechanisms by leveraging the
balance sheets of banks to reduce commercial
interest rates and to be able to attract funds from
the IDA private sector Window (IFC/WB)
15. Access to Innovative Finance :
We need to put in place a risk sharing fund that will help
us identify, redefine, measure, re-price and evolve
strategies for the risks of lending to the Nigerian
agriculture value chain. The proposed Fund should be
able to create incentives and catalyze processes to
encourage the growth of formal credit for the
agriculture value chain, as a strategy for wealth creation
among participants.
We will also need to put in pace an innovative
agriculture-focused investment fund that provides
tailored capital and technical assistance solutions to
commercially viable small and medium-sized enterprises
and Intermediaries across the agricultural sector in Nigeria.
This will help reduce the potential risk factors that will
encourage investors and international financing partners
like the IFC and IFAD among several others
16. Divorce agricultural policies from
politics
Policy continuity has been a bane of Agricultural
development in Nigeria. There is need for the
government or different administrations to take a
critical, dispassionate review of the policies and
programmes that have been put in place by their
predecessors and ensure that they are implemented well
or realigned to meet changing times and situations.
These are good foundations to improve Nigeria’s
global competitiveness and diversification of the
agricultural sector as well as reduce political risk borne
by potential investors.
17. Quick-wins
• Build a database of all smallholder farmers in Nigeria
• Introduce innovative farm inputs subsidies that goes directly to
farmers, not middle men
• Liberalize the Seed and Fertilizer sectors to make access
easier
• Make Land titling and registration very easy
• Introduce innovative agricultural financing – insurance, credit, etc
• Make the Agricultural sector Resilience by developing along
value chains
• Reduce post-harvest losses by investing in silos and storage
facilities
• Initiate a holistic policy on market infrastructure
• Strengthen and streamline development partnerships
• Complete the restructuring of the Agricultural Research
systems
• Strengthen partnerships with the Private Sector
18. How to develop agriculture sector
using from the IDA PSW
Going by the Billions to Trillions presentations provided during the
course of this program, Nigerian government can embrace the IDA,
which is an innovative window offered by the World Bank Group and
its sisters. This will enable her undertake reforms or embark on policy
changes will the aim of attracting private sector investment to the
sector. The innovative window comes in the form of the following:
• Infrastructural projects to link the farmers to the market
• Investment in power generation for agriculture sector to boost and preserve agriculture produce
• Official aid providers will also be interested in investments in research and development to boost
agricultural yield
• Government can also provide adequate loans and incentives to help farmers.
• Government will also be able to collect tax adequately through tax reforms to generate DRM