Agriculture in Nigeria is principally centered on crude exports, regardless of comprising 25% of GDP
– Nigerian authorities are encouraging agro-processing to maximise worth addition
A sequence of incentives and processing areas have been created to boost agri-business potential
As Nigeria seeks to restructure its economic system to be extra diversified and sustainable, agro-processing is rising as an necessary device for bettering agricultural worth, whereas bettering the area’s standing as a driver of financial development. Strengthening too.
Like many African nations, agriculture has lengthy been an necessary a part of Nigeria’s economic system – not solely by way of meals manufacturing, but additionally by way of its financial affect and contribution to the general workforce.
Nonetheless, the invention of oil within the Nineteen Fifties and the next growth of the hydrocarbon trade lowered the financial significance of agriculture.
Nonetheless, agriculture includes about 25% of GDP and was the nation’s largest pre-Covid-19 pandemic employer, accounting for 35% of the workforce, in keeping with the World Financial institution.
Regardless of its giant footprint, about 90% of agricultural commodities are exported, that means the nation misses out on important value-added alternatives related to agro-processing.
It’s estimated that as much as 80% of income within the agricultural sector are derived from the processing and retailing of uncooked supplies. Emmanuel Ijvere, vp of Nigeria Agribusiness Group and CEO of agro-processing agency Finest Meals, estimated that in 2016, for each greenback constructed from the export of uncooked merchandise, Nigeria might earn 10 occasions the worth that the nation exported. All objects made have been processed. ,
The dearth of processing capability signifies that Nigeria primarily exports its agricultural items abroad, the place they’re processed and infrequently exported to Africa at very excessive costs.
For instance, it’s estimated that Nigeria’s cumulative agricultural imports, at N3.3trn ($7.9bn), between 2016 and 2019 have been greater than 4 occasions its agricultural exports.
As OBG talked about earlier, such conditions will not be unusual on this space. For instance, the main West African cotton producing nations Benin, Burkina-Faso and Mali export 1.8m tonnes of unprocessed cotton price $922m, however import $2.4bn of completed cotton textiles and attire.
The results of such a mannequin is that regardless of a big agricultural space and huge arable land, Nigeria stays susceptible to meals insecurity and fluctuating meals costs.
These challenges have been underscored by the 2014 fall in oil costs, which led to the 2016 recession. Amid falling revenues, the federal government sought to diversify the economic system and scale back the import invoice by specializing in agro-processing.
Nonetheless, the pandemic has created further hurdles, disrupting many worldwide, regional and native provide chains, as has Russia’s invasion of Ukraine, which restricted exports of varied key crops to a number of rising markets and within the first half of the yr. Meals costs have elevated to file highs. 2022.
growth of agro-processing
In an effort to handle the scenario, Nigeria has lately sought to develop its agro-processing capability.
In 2015 the Central Financial institution of Nigeria launched the Anchor Debtors Program, an initiative to construct relationships between smallholder farmers and agri-processors by a spread of financing choices and inputs.
The Financial institution of Trade (BoI), for its half, has supported the sector by offering loans aimed toward creating the agricultural worth chain. It’s estimated that greater than 6.9m direct and oblique jobs have been created by the BoI initiative between 2015 and October 2020.
These measures are based mostly on broad authorities methods such because the Financial Reform and Improvement Plan 2017–20 and the Nigeria Industrial Revolution Plan, each central to plans to diversify the economic system of agro-processing and scale back the nation’s reliance on processed meals imports. see as.
Along with government-supported applications, agro-processing in Nigeria has benefited from initiatives which are funded both by worldwide organizations or in collaboration with different governments.
One in all these is the Particular Agro-Industrial Processing Zone (SAPZ) programme. With $520 million from the African Improvement Financial institution and its companions and $200 million from the Worldwide Fund for Agricultural Improvement, the initiative goals to create agro-processing sectors in all 36 states, with a pilot part being performed within the states. Ogun, Oyo, Imo, Cross River, Kano, Kaduna and Kwara.
By permitting meals producers, processors and distributors to function out of centralized
Location, SAPZs are designed to enhance meals safety and scale back meals import payments.
One other necessary initiative is the Nigeria-Brazil Agricultural Mechanization Program, which can see Nigeria obtain roughly $1.1bn in loans from the Improvement Financial institution of Brazil and Deutsche Financial institution over a 15-year interval.
The cash can be used to supply farm tools to producers in addition to present entrepreneurial providers throughout the nation to assist agricultural manufacturing, processing and packaging.
This system is a part of the Complete Inexperienced Necessities Initiative, a bilateral growth plan that can see 142 agro-processing amenities arrange throughout the nation.
In an additional enhance to the agriculture sector, on 4 July the European Union and its growth finance establishments introduced they would offer €1.3bn to Nigeria by 2027 to assist the nation diversify away from oil.
Along with growing entry to renewable power, the funding is designed to strengthen the sector by bettering farmers’ entry to markets.
mannequin for growth
One attainable mannequin so as to add worth to Nigeria’s agricultural sector is the one utilized by Sebor Farms.
Established in 1982 in Adamawa State within the North-East of the nation, the corporate gives a spread of agricultural, agro-processing and logistics providers aimed toward strengthening the worth chain.
Along with its personal on-site farm, Sebor Farms collects uncooked milk from 1000’s of small farmers and delivers it again to the corporate’s facility, the place it’s processed and packaged into pasteurized milk, butter, yogurt or cheese. .
This mannequin advantages farmers by offering them with a assured marketplace for their items, whereas Sebor Farm’s processing and packaging operations – together with its economies of scale – make sure that merchandise obtain worth earlier than they’re offered.
As well as, the corporate’s cool storage amenities assist scale back post-harvest meals losses, with the US Worldwide Commerce Administration’s 2021 report estimating that inadequate storage would consequence within the lack of greater than half of Nigerian farmers’ produce She goes.
Sebor Farms can be categorised as an Official Export Processing Zone (EPZ), which sees the corporate offering providers and amenities to small agri-business companies with out the substantial outlay related to buying their very own tools. permits to work.
“One of many priorities of the EPZ and different financial zones in Nigeria is to assist agri-business growth, enabling native farmers to modernize their manufacturing to extend manufacturing by way of each amount and high quality,” stated Aminu M. Nyako, managing director and CEO of Sebor Farms, informed OBG late final yr.
“We hope that this construction could be a mannequin to additional develop the agri-business trade within the area by creating 1000’s of employment alternatives to speed up financial and social growth,” he stated.