Ayade signs PPP agreement for $15m cocoa city project with Israeli company

There is also a funding proposal in the agreement, which provides credit facilities to help the farmers boost production.

Cross River State Governor, Professor Ben Ayade has signed a full Venture/Public Private Partnership agreement of 15 million dollars with Israeli Bean & Co. Global Ltd, towards the establishment of a special cocoa city project in the state.

NAN reports that the signing was done virtually on Wednesday.

Prior to this time, the Memorandum of Understanding guiding the project execution had been signed on February 14, 2020.

The state government had as its representatives, the Cross River Commissioner for Agriculture, Mr. Okon Owuna and the Director-General of Cocoa Regeneration Agency, Mr. Collins Ogar, and the state Commissioner for Justice, Mr. Tanko Ashang, witnessed the agreement signing.

Managing Partner, LR Group, and Bean & Co, Mr. Doron Rette, signed on behalf of the Israeli Bean& Co. Global Ltd.


The Public-Private Partnership agreement spells out a funding system where the Cross River state government would cover 35% of the project cost, while Israeli Bean & Co would cover the remaining 65%.

There is also a funding proposal in the agreement, which provides credit facilities to help the farmers boost production.

Explaining the arrangement, Okon Owuna said; “under the funding proposal, the farmers will receive about N2.4million loan for four years to cover seedlings, pesticides, fertilizers, training, growing protocols and other necessary inputs”.

Due to the long gestation period of cocoa, they will not be required to commence repayment of the loan until the fifth year at which time they would have commenced harvest.

The arrangement, according to Mr. Roy Yami, President of LR Group, presents a good investment opportunity for cocoa farmers in the state.

The agreement

According to the Agriculture Commissioner, Owuna, the agreement details provisions for the two components of the project.

The first component is the Agro Industrial Centre with a processing plant, seedlings nursery, and training facility as well as pulp powder and dry cocoa beans for export.

The second component is the Farmers Outgrowers Scheme, which he said would cover 5,000 to 10,000 hectares of land.

The project, upon completion, is targeted at involving thousands of farmers who will operate under the technical protocol of Bean & Co who will buy all their products consisting of the pods and wet cocoa beans.

“This project will increase cocoa farmers’ earnings three times over and increase productivity six times over. 

“The project will engage thousands of farmers and employ Cross-riverians in the cocoa city plus technology transfer” Owuna explained.

According to him, the Farmers Outgrowers Scheme will stretch cover cocoa producing local government areas in the state including Etung, Ikom, Boki, Obubra, Obudu, and Akamkpa.

Source: https://nairametrics.com/2020/06/10/ayade-signs-ppp-agreement-for-15m-cocoa-city-project-with-israeli-company/

Small-scale women farmers canvass increased budgetary allocation to agriculture

A coalition of female farmers under the aegis of Small-Scale Women Farmers Organisation in Nigeria (SWOFON), has decried Federal Government’s indifferent attitude to small scale farmers across the country.

In a statement released by Mary Afan, the group’s spokesperson, SWOFON lamented the vote reduction to the agricultural sector in the 2020 budget by the Federal Government from N183.1 billion to N136.9 billion which accounts for a 1.73 per cent reduction.

This, Afan noted is not in tandem with the Maputo Declarations of 10 percent annual budget to agriculture, adding that the reduction would put small scale women farmers at the receiving end of hardship.

“A 1.73 per cent budget cut goes against the Maputo Declarations that says 10 per cent of the nation’s fiscal budget should be used on agriculture and any further reduction will lead to decreased food production,” Afan said in the statement.

Speaking further, she said women farmers constitute 60 percent of the nation’s agriculture labour, describing them as the lifeblood of Nigerian agriculture and critical to the livelihood of people in the country.

“Women farmers constitute over 60 per cent of the agriculture labour force and provide inputs and functions that are critical to improved livelihoods as their efforts have not received enough budgetary support, facilitation and acknowledgement by successive governments,” she said.

In 2019, female farmers contribution to  production in Nigeria was estimated to worth N11.3 trillion.

The women farmers, however, called on the Federal Government to increase allocation to the agriculture sector to at least 5 percent of the total budget.

“Our plea is for an increase in the allocation to agriculture to at least 5 per cent of the overall budget which is 50 per cent of the Maputo commitment this will amount to not less than N201.1billion,” she said.

Afan added that despite challenges facing the small-scale women farmers on food production, their contribution had been significant, as they supplied “up to 50 per cent of the country’s vegetables and fruits.”

The female farmers’ organisation urged the Federal Government to allocate budget funded programmes and projects for women and youth with locations, clear deliverable and tied to identifiable stakeholders.

“We also know that increased public investments in critical sectors, such as agriculture, are required to lift the binding constraints on poor and more importantly, on women farmers’ productivity and would better position the economy on its path to a resurgence from the imminent recession,” she said.


Nigeria launches ambitious agricultural program

Nigerian President Muhammadu Buhari launched a program called ‘The Green Imperative,’ which will help create about five million jobs and inject over 10 billion dollars into domestic agriculture by 10 years.
Information and Culture Minister Alhaji Lai Mohammed revealed that a bilateral project between Nigeria and Brazil is part of this plan. It would be implemented in 5-to-10-year period with a cost of 1.2 billion dollars.

The funds for this program would come from the Brazilian Development Bank (BNDES) and the German Deutsche Bank, in coordination with the Islamic Corporation for Export Credit Insurance and the Islamic Development Bank.

Alhaji Lai Mohammed explained six engine assembly plants would be reactivated in the country’s six geopolitical zones to manufacture tractors and other products.

Mohammed added that 142 agricultural product processing service centers would be set up to add value, with one center in each senatorial district.

This will lead to efficiency and eliminate post-harvest losses, thereby reducing the cost of food throughout the year, he said.

Source: https://www.plenglish.com/index.php?o=rn&id=56393&SEO=nigeria-launches-ambitious-agricultural-program

Nigeria: Govt to Empower 77,400 Young Farmers On Agric Business

The National Agricultural Land Development Authority (NALDA) says it plans to empower 77,400 young farmers to engage in agricultural business.

NALDA said the agricultural businesses would range from crop farming to animal husbandry across the country.

Its Executive Secretary, Mr Paul Ikonne, said this at a news conference in Abuja on Monday.

NALDA was established in 1992 but ceased to exist and function in 2000 before President Muhammadu Buhari led-administration revived it.

Ikonne said: “We intend to have 77,400 young farmers injected into Nigerian farming business across the nation in different farming activities ranging from crop farming to animal husbandry.

“These young farmers will be drawn from the 774 Local Governments Areas of the country , with a pilot number of 100 per LGA.

“In this initiative, we will partner with governors for provision or donation of land and other stakeholders as this will create employment and food production will be increased,” he said.

According to him, NALDA has also initiated ‘Back to Farm’ Programme to encourage everyone to go back to farm.

“This can be achieved by reaching out to the military and paramilitary organisations, National Assembly members, civil and public servants, journalists, corporate bodies, religious organisations and individuals.

“You will agree with me that all these organisations mentioned and some individuals have land that are not being put to use.

“We intend to encourage them to use these lands for farming even if it is for personal consumption,” Ikonne said.

He said that NALDA’s mandate was to make agriculture a business and a source of wealth creation for the country.

“We intend to achieve this by increasing palm oil and soya beans production for export, among others.

“NALDA under my watch will identify and bridge lapses hindering the attainment of food sufficiency in the country,” he promised.


NIRSAL’S game-changing strategy for post-COVID agriculture financing in Nigeria

Like other sectors of the economy, agriculture is being profoundly and negatively impacted by the Coronavirus. In many countries, the disruption of supply of goods and services globally has resulted in the loss of revenue from agribusiness, reduced productivity of farms and food processors, large scale waste of perishable farm produce, and many other challenges that have far-reaching effects on the global population.

For example, the United Nations says Coronavirus disruptions could double the number of people globally without reliable access to nutritious food to 265 million. The projections are especially grim for regions that were already grappling with food security before the pandemic. This includes Sub-Saharan Africa, which the World Bank says could be moving from a health crisis to a food security crisis.

The World Economic Forum puts it bluntly: “COVID-19 is set to radically exacerbate food insecurity in Africa.” The continent’s challenges are complicated by some negative developments which the pandemic has brought on: lockdown measures imposed by governments across the continent have disrupted agricultural supply chains and nations dependent on food exports are severely impacted by the reluctance of developed countries to allow food export at previous levels.

The prognosis from the Food and Agricultural Organisation is no less grim: “We expect disruptions in the food supply chains. For example, restrictions of movement, as well as basic aversion behaviour by workers, may impede farmers from farming and food processors – who handle the vast majority of agricultural products – from processing. Shortage of fertilizers, veterinary medicines and other input could affect agricultural production. Closures of restaurants and less frequent grocery shopping diminish demand for fresh produce and fisheries products, affecting producers and suppliers. Sectors in agriculture, fisheries and aquaculture are particularly affected by restrictions on tourism, closure of restaurants and café and school meals suspension.”

With regard to Nigeria, Ayodeji Balogun, CEO of AFEX Commodity Exchange Limited, Nigeria’s first private-sector commodity exchange firm, recently identified some of the challenges that face Nigerian agriculture in the wake of the pandemic and subsequent lockdown. They include price spikes, labour shortages, logistics challenges, shortage of fertilisers and other inputs and limited access to markets. Balogun said: “Transport restrictions and quarantine measures are likely to impede farmers’ access to markets, curbing their productive capacities and hindering them from selling their produce.”

There have also been reports of Nigerian farmers complaining about crops rotting in the fields or at the depots waiting for trucks that never arrive. Other farmers also say the lockdowns are hindering farm inspections by banks, putting their financing at risk. This results in difficulty hiring tractors and other equipment which are crucial to many farming operations.

These developments and forecasts have prompted urgent action by major players in agribusiness including the Central Bank of Nigeria and the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending Plc, a non-bank financial institution, itself a wholly-owned and incorporated entity of the CBN, established to de-risk agriculture finance and facilitate agribusiness across entire agricultural commodity value chains.

Even in normal times, NIRSAL’s role in agribusiness is crucial, being the intervention agency that provides guarantees and other incentives to encourage the financial sector to lend to agriculture. So, it comes as no surprise that the team at NIRSAL is thinking outside the box during the present crisis. As the range of its initiatives and activities demonstrate, innovation is part of NIRSAL’s DNA.

One of the most important in this range of strategic initiatives is the NIRSAL AgroGeoCooperative system of organising, structuring, risk-managing, financing and controlling smallholder-based primary production agriculture otherwise called Farming. This is an innovation that NIRSAL introduced in 2019 and which it has updated as a smart strategy to mitigate the harsh impact of the COVID-19 pandemic on agricultural productivity and food security at this challenging time for the nation as well formally introducing the model at scale in order to mainstream millions of smallholder farmers to formal finance and formal markets

Crucially, the innovative model focuses on the most critical aspect of agriculture especially in a developing country like Nigeria: primary production. The central relevance of this focus is underscored by the Food and Agriculture Organisation: “Smallholder farmers represent the biggest employment sector in rural areas of the developing world, and they are also the most important contributors to global food production. More than 90% of the farms in the world are family farms; they produce 80% of the food and they operate 75% of the farmland.”

The AgroGeoCoop-based farming model is a unique system that groups adjoining farmlands in geographical areas that have been identified as being suited for specific commodities. It is an improvement on the suboptimal practice of smallholder farming on small, unconnected parcels of land. Its unique Geo or farmLand-based cooperative approach facilitates the agglomeration of large parcels of farmlands which makes it possible to introduce Precision Agriculture tools (Remote Sensing, Deployment of Unmanned Aerial Systems, satellite-based Global Positioning Systems etc) resulting in the optimisation of results.

The Agro Geo-Cooperative model is anchored on the fundamental theory that it is the farmland that makes the farmer, not the other way round. A basic feature of the AgroGeoCoop is the GPS-enabled Geo-tagging of each farmer to his land. This has solved the problem of identity and accountability which is a major risk element in smallholder agriculture finance around the world and particularly sub-Sahara Africa, Nigeria inclusive.

Accordingly, the model groups farmers based on the contiguity of their farmlands, with each farmer retaining what is originally theirs and becoming partakers in large, structured farming projects. The bigger and more contiguous a GeoCooperative is, the faster and easier for it to have access to structured finance, quality inputs and structured markets through NIRSAL’s facilitation.

To ensure improved outcomes, NIRSAL has invested in significant technical and technological capabilities to support and monitor this system of structured primary production. This is because understanding smallholder farmer data management requires defining from whom data is captured and the methodology of the data capture, the analytics and ultimately its distribution and usage as intelligence, information or as a decision support system This has led NIRSAL to acquire and deploy geospatial tools and platforms to enable field-mapping activities such as Know Your Leader (KYL), Know Your Customer (KYC), Know Your Farm (KYF) and Know Your Neighbour (KYN) which are critical elements in profiling the human and the geographic elements of the AgroGeoCoops.

The array of field-ready equipment includes GPS devices, drones, mobiles, GIS-enabled tablets and BVN Enrolment/Verification Machines all linked by GSM Networks, satellite and Cloud synchronisation capabilities for back-end data collection, validation and rendition. To complement and strengthen the value of these tools and platforms, NIRSAL is also leveraging its partnerships with institutions such as NiMET and Microsoft which provide both Agrometeorological and embedded data capture capabilities for decision support to further enhance farm operations.

The bottom line: through such technology-enabled, risk-controlled systems, farmers enrolled in NIRSAL’s AgroGeoCoops have higher chances of success in access to structured finance, quality inputs, extension monitoring, weather information, aggregation services, access to markets and other timely support.

AgroGeoCoops, the source of primary production, are also the centrepiece of NIRSAL’s Mapping-to-Markets strategy (M2M), an end-to-end approach to agriculture finance whereby NIRSAL ensures that all segments of agricultural value chains are linked in a logical sequence to their immediate markets, with near-zero cash transactions amongst the value chain actors.

This is feasible because of the guaranteed trade relationships that would be established between the NIRSAL AgroGeoCoops on the one hand and identified off-takers on the other hand coupled with the strategic trade linkages that would feed off the ecosystem for inputs, mechanisation, research and adaptive technologies, value-added processing and logistics services. Thus the NIRSAL AgroGeoCoop ecosystem will bring clarity, structure and cash-flow visibility and tracking to banks, investors other financiers that will enable them to lend with confidence from their balance sheets and hugely complementing government intervention financing efforts in agriculture.

Already, NIRSAL has set for itself a clear and measurable target of creating 16,000 Agro Geo-Cooperatives on 4 million hectares of farmland and enrolling about 8 million farmers across Nigeria expected to produce about 12 million metric tonnes of Grain Product Equivalent (GPE) annually, over the medium to the long-term time horizons.

To ensure the success of this massive project, NIRSAL has trained and primed its Project Monitoring, Reporting and Remediation Officers (PMROs) in the 36 States of the Federation and the FCT to assist farmers, farmer leaders, aggregators and other interested participants to meet the pre-qualification requirements.

The PMROs are on hand nationwide to guide participating farmers through the enrolment processes which include identifying their farm’s geographical coordinates and size, electing Agro Geo-Cooperative leaders as well as the free registration which can be done online or offline.

In order to open up the Agro Geo-Cooperatives project to the thousands of eligible farmers, NIRSAL is reaching out to all relevant stakeholders, including community leaders, individuals, enterprises, corporate bodies, graduates, N-POWER Beneficiaries, active and retired leaders and farmers in The ADP programme, World Bank FADAMA Programme, USAID MARKETS Programme, IFAD Value Chain Development Programme, The World Bank Climate Adaptation and Business Support Programme, AfDB Agric Programmes, the DFID’s Propcom Maikarfi Programme, the SASSAKAWA Global 2000 Programme and others.

The GeoCooperative model for smallholder farming has two broad components. The first is a rigorous and well-thought-out structuring of primary agricultural production based on a deep but practical understanding of historical and current trends and practices. The second is the maximisation of appropriate technologies. Together, these two elements have the potential to have a game-changing impact on Nigerian agriculture in the wake of the Coronavirus pandemic and beyond.


Nigeria Needs to Increase Food Production to Feed Itself, Experts Say

Nigerian President Muhammadu Buhari has called on farmers to ramp up food production in the wake of the ongoing Covid-19 pandemic, as experts indicate the continent’s most populous country needs to take a number of major steps in order to increase the supply of food.

Buhari addressed farmers, calling on them to improve production: “We don’t have money to import so we must produce what we have to eat.”

Part of the solution includes moving investments towards agriculture and away from petroleum products. Money that could have bolstered Nigerian agriculture had been spent on food imports.

Nigeria produces 60,000 metric tons of wheat per year, while the annual demand for wheat totals at 4.7 million metric tons, leaving a considerable deficit.

Buhari’s calls for farmers to provide for Nigeria is not new, according to Nnamdi Obasi, senior adviser on Nigeria for the International Crisis Group (ICG). Buhari has made some effort to ban the use of foreign exchange to import items, including rice, in order to boost local production.

“In August 2019, he directed the central bank to block food importers and requests for foreign currency because of reports that food was being smuggled in across the borders from neighbouring countries,” says Obasi.

The borders were locked down, too, which was reinforced by the recent Covid-19 restrictions.

“The oil price crashing, the fall in export revenues, and the very significant cuts in the budget for 2020 have added extra urgency to that policy, so it certainly deserves more attention now than ever before,” he adds.

Covid-19 restrictions

Food supply was exempted from most restrictions during the height of the lockdown in Nigeria, but it was still indirectly affected by falling consumer incomes and other shocks, according to a report out by International Food Policy Research Institute (IFPRI), co-authored by Kwaw Andam, director of the Nigeria Strategy Support Program.

TheNigeria: Impacts of COVID-19 on Production, Poverty & Food Systems report, out this month, also indicates that Nigeria lost 1.2 billion euros in the agriculture sector over the 5-week lockdown period.

“The restricted movement plan took place at the start of the planting season, so this obviously affected agriculture,” says Abuja-based Andam.

“On inter-state passenger travel, the lockdown had some implications in terms of labor availability for farmers, and how easily they can trade their food,” he adds.

Forty percent of Nigerians live below poverty line: statistics office

Buhari sets 4 May date for lifting Nigeria’s coronavirus lockdown

The IFPRI report projections indicate that millions of Nigerians will fall into poverty for a short period as a result of Covid-19. “Higher income and urban households experience larger income losses as lockdowns target cities, and the non-poor are more likely to work in manufacturing and services,” according to the report.

“But incomes of rural and lower-income households will also fall, mainly due to effects of food system disruptions on smallholder farmer incomes and the closure of urban informal markets where urban poor often work,” it added.

Source: https://allafrica.com/stories/202005280008.html

BOA: Destined for repositioning

The history of Bank of Agriculture, BOA, cannot be complete without talking about its roots. BOA’s roots started in 1972 when the Nigerian Agricultural and Cooperative Bank, NACB, was established with headquarters in Kaduna, Northern  Nigeria, as a national agricultural production credit institution aimed at promoting agricultural production and rural development and growth of the Nigerian economy.  Its name was changed to Nigerian Agricultural  Bank, NAB, in 1978.

 NACB’s choice of location in the North was not by accident as it is widely believed to be the epicentre and heart beat of agricultural activities. Major economic crops that sustained Nigeria from the 1940s to the 1970s for export included Groundnut and Cotton along with Hides and Skin. One vividly recalls with pride the Kano famous groundnut pyramids that earned forex for Nigeria. 

It is not in doubt that NACB became a household name in Nigeria due to its spread, networking and the way it impacted positively on the lives of farmers and cooperative societies in the country through loans for crop farming, agric produce marketing and animal rearing among others to the tune of billions of Naira.

Additionally, NACB came on board to finance investments in equity capital of major agricultural and agro allied industrial ventures, provide finance for both domestic and  international markets, financing of tractor hiring operations and agro processing in the country.

By 1973, NACB took off with 13 branches and expanded  to 5 Zonal offices, 38 branches and 267 other offices manned by 1,200 staff in the country. Its structure then made it one of the best in terms of service delivery  with full compliments of a board, management team, trained, well motivated,  professional and dedicated staff determined to making  farming not just a pastime but a life style for most Ngerians. With the decentralisation of the bank’s operations in 1988, approvals for its loans exceeded N400 million and rose to more than N600 million in 1989 from a meagre N150 million in 1987.

Bank of Agriculture came into existence in 2000 as an outcome of government’s review of its micro credit institutions to assume the assets of NACB and the merged Peoples Bank of Nigeria, PBN and Family Economic  Advancenent Project, FEAP.

Since then, BOA had struggled to control the number of loans in its portfolio that had hampered its ability to provide sustainable support to the agricultural sector of the country.

The bank witnessed tremendous growth from inception until around the late 1990s when its fortunes began to decline due to a number of reasons including absence of government’s political will, interference and deliberate attempt to sabotage through sentimental  political appointments into its board and top management positions. This resulted in the inability of the bank’s official to embark on an aggressive loans recovery for the needed sustenance of the bank and its activities.

Regrettably, the bank derailed from the vision and mission of its founding fathers largely due to failure of the civilian governments from 1999 to deliver on its mandate.

These reasons and many more  have largely contributed to the present comatose position of the bank that was hitherto the most vibrant agricultural funding outlet in the country. 

With the commitment and foresight of the current Minister of Agriculture, Sabo Nanono, himself a mixed farmer of international repute to revitalise the BOA, the coast is now clearer for a return to the good old days of agricultural financing in the country. The minister is determined to change the narratives and the fortunes of the bank for the good of the country in two distinct ways.

Firstly, he has identified the taking away of a key component of agric financing from BOA by CBN on the Anchor Borrowers programme in its packaging, financing and management. This should have gone to BOA.

Secondly, the recent appointment of a seasoned banker, Malam Alwan Ali Hassan as the Managing Director and Chief Executive Officer of BOA, is not only apt but one that has “put a round peg in a round hole” given his experiences and exposures in public and private life as s public servant, administrator, banker, entrepreneur and politician spanning more than 35 years.

Born 62 years ago in Kano, Malam Hassan, who holds a BSc Quantity Surveying and  MBA from Ahmadu Bello University, Zaria, is an Associate Member of Nigerian Institute of Quantity Surveyors and Honorary Senior Member of Chartered Institute of Bankers.  
Having worked with state owned Water Resources and Engineering Construction Agency, WRECA and Kano State Housing Corporation at the state level for years after graduation.  He then moved to  Central Bank of Nigeria, CBN as a Manager;  United Bank for Africa as a Principal Manager;  African International Bank, AIB as an Assistant General  Manager and First Bank of Nigeria as Deputy General Manager before his appointment by CBN  as Executive Director of Bank PHB ‘to institute corporate governance and recapitalise the bank’
Malam Alwan retired in November 2011 after a glorious and unblemished banking career of over 2 decades.

Prior to his appointment to BOA’s top most position, Alwan was the Chairman and CEO of Midrange Universal Biz Ltd, a property development and building materials outfit and Kankara BDC.
Its not a matter of debate whether or not he has the capacity to deliver on his mandate as a rescuer and a messiah with a Midas touch. Our prayer and wish is that Alwan will not let President  Buhari down on this well deserved and merited appointment.

Source: https://www.blueprint.ng/boa-destined-for-repositioning/

Kwara flags off 2020 cropping season

The Kwara state government has commenced the sale of improved seedlings to farmers in the state at subsidized rate.

Commissioner for Agriculture and Rural development, Adenike Afolabi-Oshatimehin disclosed this during the flagged off of the 2020 cropping season.

Correspondent Ibrahim Alege reports that bad roads and lack of mechanised farm implements have always been the major challenges of farmers in Alateko, a rural community with vast arable land in Moro local government area.

At the flag off of the 2020 cropping season in Kwara north, the state government said it is ready to change the narrative. It promised to roll out other plans to encourage commercial and mechanised farming.

The efforts are geared towards encouraging good agricultural practices on commercial scale as a springboard for the anticipated agriculture-based industrialisation of the state.

Source: https://www.tvcnews.tv/kwara-flags-off-2020-cropping-season/

Youths in Ogun broiler project begin sale of chickens

Youths in the Ogun State Broiler project have sold 54,000 broiler birds in an off-taking arrangement.

The youth, numbering 54, were the beneficiaries of the project that was inaugurated in December 2019.

The sale was officially consummated on Monday during the off-taking of the second cycle of 54,000 chickens at Odeda Farm Institute, Odeda, Ogun State.

Speaking at the event, the state Commissioner for Agriculture, Dr Adeola Odedina, explained that the project was set up to create jobs and empower youths.

The commissioner added that in the first cycle of the project, the 54 pilot youths who reared 1,000 broilers each, with a mortality rate of less than three per cent and an average weight of 1.9kg, made an average profit of N140,000 within six weeks (42 days) of production.

This project has also spurred the poultry value chain in the state,” he said.

He explained further that the project delivered 110 tonnes of poultry meat to the off-taker in the first cycle, thereby reducing the importation of poultry products and also placing the state at the vanguard of poultry meat production in Nigeria.


Efficient Power: Addressing a Critical Element in Nigeria’s Agro-Industrial Revolution

Agriculture sector is back in the spotlight as a viable foundation for sustainable and inclusive growth for Africa’s largest economy and most populated country.

As Nigeria’s government comes to grips with the economic slowdown that has followed the global spread of the novel Coronavirus, known as Covid-19, the agriculture sector is back in the spotlight as a viable foundation for sustainable and inclusive growth for Africa’s largest economy and most populated country.

However, to truly harvest the potential of the country, most observers agree that large scale agribusinesses and agro-processing must be an integral part of the government’s economic policy. Energizing that growth is a responsibility that public and private sector players must embrace. Given the unreliable supply of electricity from the grid, independent power projects (IPPs) are a viable alternative source of energy for the operations of agro-allied industries.

The prospect of agribusinesses getting reliable power from the grid remains dim in the short term. It will take strong political will and significant private capital to fix several problems across the power value chain. Even if the public and private sector show such commitments, the required investments in generation, transmission and distribution infrastructure could take years to complete for industrial users to feel comfortable adopting the grid as a power source.

Supplying Energy Efficiently

This challenge presents an opportunity, and, in typical Nigerian fashion, some entrepreneurs are awake to the opportunity. Fenchurch Power, an infrastructure development company with operations across Nigeria is one such example. Following its successful capital raise, the firm aims to add 150 megawatts of IPP capacity to the country over the next 5 years to power a range of industries, including the agriculture sector. There is a huge opportunity in the supply of energy to power agro-allied and manufacturing industries in Nigeria. For these players to compete locally and in the international market, they must not only provide the energy to fuel agro-allied operations, but they must also do so in the most efficient way possible.

Unrealized Potential

Agriculture remains the mainstay of the Nigerian economy, providing the main source of livelihood for most Nigerians. With over 80 million hectares of arable land and a population of over 200 million people, the potential for business success is huge. However, the sector faces many challenges, notably an outdated land tenure system that constrains access to land, a very low level of irrigation development, limited application of research and new technologies, and the inefficient distribution and high cost of farm inputs. Other constraints to the growth of investment in the sector are poor access to credit, ineffective procurement and distribution of inputs, inadequate storage facilities and poor access to markets.

As a result, according to the National Bureau of Statistics, the value of agricultural goods imported into the country have risen steadily over the last 4 years to N959 billion in 2019 while exports have declined over the same period to N269 billion. Notably, exports are also almost exclusively made up of raw materials, denying the country of the higher revenues that come with adding value to raw agricultural products.

As part of its programme to catalyse the growth of the agricultural sector, the federal government has announced plans to establish special agro-industrial processing zones (SAPZ) in collaboration with the African Development Bank. Given the infrastructure and other incentives that such zones will offer agribusinesses, they have the potential to support the growth and emergence of export-oriented agribusinesses.

Grid Supply Void

IPPs are a logical solution to addressing the current challenges that prevent industrial users from adopting distribution companies as a reliable source of electricity. Several factors across the power value chain prevent distribution companies from becoming reliable suppliers to industrial users. A case can be made for the distribution companies to have power at the medium voltage end of the value chain. This helps to eliminate some of the technical and commercial losses experienced and allows the discos to receive more power into their network to feed industries. According to a recent Price Waterhouse Coopers report, only a fraction of power generated ends up with industries. This clearly shows a significant gap that must be filled. There should also be more partnerships between independent power plant developers and the distribution companies. These partnerships will significantly increase the revenue profiles of both parties and reduce the size of the alternate market for generators. Greater integration between the gas suppliers and the power generating business is also an important dynamic that will evolve from the increased usage of IPP solutions.

Powering Large Scale Agro-Investments

In the meantime, large scale agro companies such as Flour Mills, Olam, Honeywell Group and the Dangote Group, have invested billions of naira in a wide range of projects across the country. Many of these investments are unlikely to be within the proposed SAPZs. These companies, therefore, have to make the most of the opportunity where they are cited. An important part of that effort is to be an efficient producer.

Due to the unreliable energy from the national grid, these companies have invariably invested in alternative power projects to support their operations. However, the development and operations of these power assets is not the core business of these large scale agro companies and is, therefore, inefficient use of capital that could fund the expansion of their core businesses. They are best suited to focus on increasing production, quality control and business development.

While electricity is a vital resource for agribusinesses, investing in power generation projects is inefficient for several reasons. First, the investment is a distraction from their core business. In addition to managing often problematic production value chains, agribusinesses bear the burden of running power generating plants and the responsibilities associated with the staffing and maintenance of these facilities. Second, because these companies are focused on generating reliable power for their operations, they are unable to optimize the value of the power generating assets.

Case of Telco Style Efficiency

In the search for a more efficient model, the mobile telecom industry presents an example of a sector that has embraced the concept of outsourcing to achieve greater efficiency. After the Nigerian government-issued licences to mobile telecom operators in 2001, an essential part of the investment required to achieve national coverage was the construction of cell towers. A decade later, most telcos have shied away from investing in cell towers and have embraced the idea of selling these assets to third party companies such as Helios Towers and IHS that are better equipped to optimize the value of these assets.

Retooling Energy for Agribusiness

There are several options for agribusinesses seeking a path to greater energy efficiency. By partnering with the host state governments, distribution companies, and large corporations, power infrastructure companies can execute customized power purchase agreements (PPAs) that will underpin independent power projects for specific industries. Furthermore, where such contracts exist, power infrastructure companies with greater capacity are willing to purchase the underlying power assets from providers with constraints to meeting the terms of their contracts. They can also purchase power assets from agribusinesses and then execute a PPA which will guaranty the supply of electricity to the firm. A key to delivering power efficiently to multiple users is having a business model that is built to do exactly that. Properly structured power infrastructure companies are able to accommodate a variety of scenarios and deliver solutions that optimize the peculiar conditions that confront agribusinesses.

Covid-19 Wake Up-Call

The full or partial lockdowns and the associated decline in demand for goods and services that have followed the outbreak of Covid-19 in Nigeria present a significant challenge for businesses operating in Nigeria. A key to wading through the difficult times is to innovate in ways that not only expand the markets for producers with a view to boosting revenues but also reconfigure the cost base for operations. Outsourcing electric power supply presents one way to improve the operational efficiency of agribusinesses going forward. Power infrastructure firms such as Fenchurch Power are strategically positioned to revolutionise how players achieve much-needed efficiency.