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Nigeria's agricultural transformation: a multi-faceted plan to empower Nigerian farmers and end the country's import dependence is attracting commercial and political plaudits.

On independence, Nigeria was self-reliant in food production and was a leading exporter of cotton and palm oil. Half a century later, the country is trying once again to break away from a dependence on food imports that has, as Minister of Agriculture Akinwumi Adesina says, exported jobs and imported inflation.

In 2011, Nigeria imported $11 billion of agricultural produce, including $4 billion of wheat and $3 billion of rice.

As Nigeria prepares to absorb millions of young people into its workforce over the next decade, the government had identified agriculture as one of the most powerful catalysts for job creation. More than 50% of the country's workforce already works in agriculture, although many have historically been smallholders working close to subsistence levels, lacking access to inputs, markets and financing.

The government's transformation agenda, Adesina says, aims to treat smallholders as enterprises, and drive farmers to become business people. The government wants, he explains, to turn smallholders into millionaires.

"We're not just talking about it. It's happening," he says. "That's the big difference. We took a very deliberate approach to transforming the agriculture in this country from agriculture as a development activity to agriculture as a business, and it's working."

Between 2011 and 2015, the government set a target of creating 3.5 million jobs, making the country self-sufficient in rice and reducing wheat imports by substituting it with locally grown cassava.

The potential, Adesina says, is clearly there. Nigeria has 84 million hectares of arable land, 60% of which is unused. Four major rivers and many smaller ones provide 279 billion cubic metres of water, and an irrigable area of 3.14 million hectares, of which just 1% is currently irrigated. Already the country produces hundreds of thousands of tonnes of grains and fruit and it has the second-largest herd of livestock in sub-Saharan Africa. These resources, however, have not been commercially exploited.

Weak infrastructure and cheap imports have historically reduced the competitiveness of Nigerian manufacturing. The government now hopes to use the resources the country has to promote industrialisation.

"We are the largest producer of cassava in the world. If we are the largest producer, we must also necessarily become the largest processor of cassava in the world. Today only 10% of our cassava is used in industry. We've changed that. We're now using cassava for starch, cassava for sweeteners, cassava for ethanol production, for fillers in medicine. And also cassava, as high-quality flour to substitute for wheat flour in bread."

Since the government began to promote the use of 40% cassava flour in bread, 30 bakeries specialising in the product have been established across the country.

Processing cattle for halal meat, and turning the huge fruit crops into juice, both to replace imports from overseas, offers another route to manufacturing jobs, Adesina says.

The government aims to train 750,000 young people through its Nigerian Agricultural Entrepreneurs programme. Access to training and skills has been a persistent problem for agricultural enterprises and cooperatives, and has been a complaint of investors.

The new climate of engagement is winning some admirers in the private sector.

"I think there is a sea change in the approach this time around," Mukul Mathur, CEO of Olam Nigeria, one of the largest agricultural groups in the country. Individual state governments, which have responsibility for land, are opening up for investment, Mathur says, and an investor forum that brings together major private sector players has helped to ensure that business has an input into policy making.

Olam is one of a number of producers that are scaling up in Nigeria.

"I think that's largely on account of the signals that have come out of the government, indicating that they want to address the infrastructure issues and they want to actively engage with the stakeholders."

In 2011, Olam leased 10,000 hectares of land in Nasarawa State to expand rice production and establish a milling facility. After investing heavily in the land, the company hopes to reach 6,000 hectares under cultivation by 2020 and buy from 16,000 farmers in the surrounding area.

Olam has trained local residents in mechanised farming, offering them productive employment, and built access roads that make access to market for smallholders easier. The result has been visible economic growth in the immediate vicinity of the farm, with permanent structures replacing traditional huts.

Policy stability and a sense that the problems of corruption that used to affect the distribution of seed and fertilisers to farmers are being addressed have created a climate that is conducive to investment, Mathur says. Major processors, such as Dangote Sugar and Flour Mills of Nigeria, are now actively investing in production too.

"Typically, investments in agriculture on the production side require high investments, up front investments and long gestation periods. The uncertainty can be a big determinant of the stakes you put on the table," Mathur says. "If those [issues of infrastructure and corruption] are getting addressed or reduced, then investors see that as a positive incentive to expand."

These large-scale investments are changing the visibility and status of agriculture in Nigeria, Adesina says. The sector is no longer viewed as the poor cousin of other industries.

"Young people are moving into agriculture in Nigeria. They see it as a very viable economic activity ... When [Aliko Dangote] moves from being an importer to being a domestic producer and processor of food, that tells you how much has shifted," Adesina says. "People are coming out of the oil and gas sector and moving into agriculture. You see people coming out of the banking sector and coming into agriculture, out of the telecoms industry and moving into agriculture. We've made agriculture quite exciting for the youth."

In total, $4 billion worth of private sector investment into agriculture has been mobilised since 2011. The sector has already added 3.4 million of the 3.5 million jobs it aimed to create. Rice production has soared to nearly 3 million metric tonnes, creating a gross value of more than $1 billion for farmers and processors, Adesina says.

"That means we're creating wealth, which is what we set out to do."

From 15 seed companies in the country in 2011, there are now 80. The distribution of improved seed has increased from 5,000 metric tonnes to 50,000, and 8 million farmers have been reached with fertiliser and seed using the innovative new electronic wallet system, which uses mobile phones to distribute subsidies.

"We improved the food security of close to 40 million people," Adesina says. "Those people are producing more surpluses than ever, they are producing more money than ever."

Banks are seeing the potential in agriculture too. Three years ago, their lending to the sector was a tiny fraction of their business. Today it is around 5% of all of the lending in the country. This year, the banks are on course to lend nearly $250 million to the sector. Buoyed by access to credit, cash crops have boomed. In 2013, exports of agricultural produce increased by around $4.5 billion.
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Title Annotation:Nigeria: Agriculture
Comment:Nigeria's agricultural transformation: a multi-faceted plan to empower Nigerian farmers and end the country's import dependence is attracting commercial and political plaudits.(Nigeria: Agriculture)
Publication:African Business
Geographic Code:6NIGR
Date:May 1, 2014
Words:1174
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