Investors Project N4.9trn Private sector Agric Investment by 2019

Investors strongly agree that private sector investments in Nigeria’s agricultural sector which amount to about N1.23 trillion between 2011 and 2014 can grow fourfold to N4.9 trillion between this year and 2019.

 

According to them, individuals and organisations within and outside the country would be making fresh investments or increasing their current level of investments in the agric sector if the incoming Muhammadu Buhari administration’s policies do not threaten the investments that have already been made by investors in the agric sector especially in the last four years.

Akinwumi Adesina, minister of agriculture and rural development, in the last quarter of last year stated that investments made by private domestic and foreign investors in terms of businesses started or expanded in the agric sector since 2011 had grown to $5.6 million (N1.23 trillion at a dollar rate of N220).

It would be recalled that Dangote Group invested about $9 billion in a petrochemical plant and fertiliser manufacturing plant, while Indorama, an Indonesian company, put in $1.3 million into fertiliser manufacturing, and Notore put up $1.5 billion to expand its fertiliser manufacturing plant in Nigeria. This is also including the recent decision by Dangote Group to invest $1 billion in commercial rice production in Nigeria – the largest ever single investment in food production in Africa.

Speaking to BusinessDay on issues that could boost investors’ confidence, Sotonye Anga, chief executive officer, Universal Quest Limited, an agro-commodity dealership firm and also publicity secretary, National Cashew Association of Nigeria (NCAN), says within Nigeria and all over the world, people are watching to see if Nigeria would turn out to be a harmful investment destination or not when a new government comes to power. 

According to Anga, “I believe the current agric investments can grow fourfold to N4.9 trillion by 2019 if the Buhari government does not allow policy inconsistencies to hurt private sector investments.”

“More investments would be made because Nigeria’s population is expected to grow significantly in the next four years; industries within and outside Nigeria would need more agricultural raw materials, the developed nations of Europe and Asia are looking to Africa to produce food and Nigeria has been identified as a prime target”, he said.

Anga also says investors want to be assured of security of lives, legislative backing to policies, tax rebates for indigenous agribusinesses employing large number of workers and quick clearance at the ports for equipment imported into the country.

“The (President) Goodluck Jonathan administration made agriculture to be driven by the private sector. The new government must not hijack agricultural investments, but provide agricultural infrastructure -power supply, more silos, more irrigation facilities, agricultural equipment and more processing facilities. If that is done by the Buhari government, we would see an influx of agricultural investment”, Anga said.

Analysts agree that based on the fact that banks have started lending to agriculture, there is strong hope that there will be investment increment in the sector going forward.

Adesina had said last year that the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) of the Central Bank of Nigeria (CBN) has reduced the risk in banks’ lending for farmers and reduced the lending rate to farmers.

“The CBN’s NIRSAL facility to reduce the risk of lending to agriculture is working. Banks are lending to agriculture today more than ever before. The share of lending to agriculture as a share of total bank lending expanded from about 2 percent in 2011 to 5 percent by 2013.

“Bank lending to seed companies and agro-input dealers expanded from $10 million in 2012 to $53 million in 2013 while bank lending to fertiliser companies expanded from $100 million in 2012 to $500 million by 2014”, he said.

Grace Oluwatoye, managing director, Vidsa Multiventures Ltd, a food processing firm and  executive director, Lifebuilders, also says, “I think it should strategically increase fourfold to help grow what we eat, create more jobs, have household nutritional sufficiency and sell excess.”

To achieve that, Oluwatoye says government should continue with the current policies and provide infrastructure that will make private sector growth a possibility.

She also says the incoming government should put a stop to multiple taxations and the endemic corruption in the system.

“Civil servants should face more of policy formulation, monitoring and evaluation instead of implementation of activities to reduce the time spent on turning policy to action”, Oluwatoye further stressed.

Edobong Akpabio, a farmer and publicity secretary, NECA Network of Entrepreneurial Women (NNEW), says growing private sector investment will need the new Federal Government encouraging state governments to support agriculture and agro-preneurs.

“There are some policies that should not be re-implemented such as the fertiliser subsidy, we have gone beyond that now,” Akpabio stresses.

Abel Adewale, chief executive officer, Xavier Farm, says the Land Use Act and other agriculture policies that are archaic or harmful to private sector investments must be changed. He also urges cheaper cost of funds for agribusinesses, longer moratorium, overhauling of the management of the Bank of Agriculture (BoA), newer and more professional bankers to work at the bank, improvement in staff working conditions, recapitalisation of the BoA and opening of more branch networks.

Fausat Sanni, chief executive officer, Royal Siblings, a food processing firm, says encouragement needs to be given to small producers by not allowing importation of food and agric products that can easily be cultivated or manufactured in the country.