• Tuesday, December 05, 2023
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Investment trends in Nigerian agriculture


 Nigeria’s importation habits are old news now – second-largest rice importer and major importer of homegrown products like sugar and wheat to the tune of $11 billion. With increased awareness of this has come increased activism in this regard – and, from the look of things, increased investment in the domestic industry. This is no surprise as agricultural stocks are reportedly doing well on the market and large-scale investment is yielding great rewards for those who dare to make them.

Part of this is coming from Dangote Group, which is planning to establish Africa’s largest fertiliser plant with $3.5 billion. But prospective foreign investors are also entering the fertiliser market. Indorama, an Indonesian fertiliser company, is committed to investing $2.5 billion in fertiliser plants in the country. Other agribusiness initiatives are coming from well-known multinationals like Syngenta, Monsanto, and Cargill, which plans to develop a sweetener from soft drinks and beer brands from cassava.

In addition, the Nigerian Elephant Group has revealed its plan to build a 250,000-metric-tonne-per-annum fertiliser plant. And last week, the consul-general of the United States to Nigeria, Jeffry Hawkins, expressed to Governor Adams Oshiomole the United States government’s interest and commitment in establishing a $250-million fertiliser plant in Edo State. This initiative is to be spearheaded by the Overseas Private Investment Corporation of the United States Government and the Green Petrochemical Company. This project is set to create about 1,500 jobs.

This general investment trend has very positive implications for the sector, especially if it results in a win-win agreement for Nigerian citizens and these large corporations. For those who are already familiar with the record of some of these companies, some concerns will immediately arise – like whether local farmers will be exploited or displaced or marginalised; how much of the revenue will leave the country in inflated profits for these multinationals; what the environmental effects of their activities will be. But in general, and at face value, more money and channelled investment are bound to spell real gains for the sector and the country as a whole – especially if these translate into increased fertiliser use for domestic farmers. However, to maximise the gains from investment, more actors are needed. An investor’s map will also go a long way in revealing the areas of activity as well as the areas of opportunity.

  To achieve food security and economic growth, investment must be intensified for wheat, maize, rice, corn, cassava, yam, cocoyam, cowpeas, groundnuts, soyabeans, among others. Furthermore, efforts in livestock and fisheries production must be intensified. Investors are needed to take on food processing to stem the tide of importation of even the most basic processed food or ingredients. According to some reports, many international airlines, which operate in Nigeria, get all their food products from abroad. Large-scale potential exists in the area of agricultural inputs and machinery. Infrastructure such as storage, distribution, and transportation can also be developed with the help of investors as well as other private non-agricultural corporations looking to expand the corporate social responsibility agenda. In a country that knows too well the effect of floods, investment in flood prevention and management infrastructure will make a world of difference for output and revenue.

Many years ago, Nigeria dominated the international food markets. As a leading food exporter, Nigeria had an 18-percent share of the cocoa market, a 60-percent share of the palm oil market, and controlled 42-percent of the market for groundnut oil. Needless to say, with the oil boom, rural-urban migration, the neglect of agricultural development projects and the pervasive rot in the public bureaucracy, market dominance in these areas has become a thing of the past. But with our ample resources and with the political and corporate will, we can regain that dominance. Indeed, our present dominance in the international cassava market indicates that growth is possible.

At this point, it is important to state that investment should not come from domestic and international private-sector investors. Public investment in agriculture will also need to increase in order to spur growth. According to a brief by the International Food Policy Research Institute, “Under [an] agriculture driven-low efficiency spending scenario, the government will need to increase its investments in agriculture by ₦987 and ₦1,635 billion (in 2008 prices) by 2015 and 2017, respectively. When a more efficient spending pattern is assumed, additional agricultural spending will be ₦305 billion by 2015 and ₦448 billion by 2017.” The report continues by asserting: “If the government can significantly improve its efficiency in agricultural investment by better allocating and managing public expenditure, much less spending would be required to reach its 10 percent annual agricultural growth target.”

This is why the Federal Government-led Growth Enhancement Scheme (GES) is important. Last year, the scheme tackled red tape and pervasive corruption in the allocation of fertilisers, giving many farmers a means to access their allocations directly. Improved seeds and other inputs such as farm machinery are also part of the GES agenda. With sustained effort in this field and a comprehensive approach to these issues and the continuation of this investment trend, the enormous potential to really enhance agricultural, social and national growth can finally be realised. 



Obasi is a syndicated columnist, co-founder of the Youth Consortium for Progress and one of the program managers for the Harambe Incubator for Sustainable and Rural Development (HISARD).

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