In the 1960 s , before it turned to oil,
Nigeria was one of the most promising
agricultural producers in the world .
Between 1962 and 1968 , export crops
were the country’ s main foreign
exchange earner . The country was
number one globally in palm oil exports ,
well ahead of Malaysia and Indonesia ,
and exported 47 percent of all
groundnuts , putting it ahead of the US
and Argentina.
But its status as an agricultural
powerhouse has declined , and steeply.
While Nigeria once provided 18 percent
of the global production of cocoa ,
second in the world in the 1960 s , that
figure is now down to 8 percent. And
while the country produces 65 percent
of tomatoes in West Africa , it is now the
largest importer of tomato paste.
Nigeria’ s minister for agriculture,
Akinwumi Adesina , reels off these
statistics with regret as he discusses the
country ’s deteriorating agriculture
sector . “Nigeria is known for nothing
else than oil, and it is so sad , because
we never used to have oil – all we used
to have was agriculture ,” he says.
Nigeria’ s oil has come at the detriment
of the agriculture sector, he claims ,
“ and that is why we had a rising poverty
situation. We were having growth but
without robust growth able to impact
millions of people because it is not
connecting to agriculture.”
That might explain why Nigeria’s
economic statistics are so puzzling.
While the country has been posting high
growth figures , and makes it into
Goldman Sachs’ ‘Next 11 ’ emerging
markets group , absolute poverty is
rising, with almost 100 million people
living on less than a $ 1 .25 a day. The
National Bureau of Statistics says 60. 9
percent of Nigerians in 2010 were living
in absolute poverty, up from 54 .7
percent in 2004 .
But it is not just oil that has hollowed
out the agriculture sector, with knock-
on effects on poverty rates . Restrictive
trade policies also had an effect ,
especially in the late 1970 s and early
1980 s . Tariff increases, a rise in import
licenses and duties, and export bans and
tariffs – as well as a centralisation of
marketing of agricultural produce
through the formation of crop - specific
commodity boards – all created a
lumbering , inefficient private sector, as
well as opening up many opportunities
for corruption . Today , Nigeria has
transitioned from being a self-sufficient
country in food to being a net importer,
spending $ 11bn on imports of rice , fish
and sugar. “It just makes absolutely no
sense to me at all, ” says Mr Adesina.
“ My job is to change that.”
Not everything is in the minister ’s
hands , of course . Climate change poses
a threat to Nigerian agriculture – the
World Bank recently predicted an up to
30 percent drop in the country’ s crop
output due to erratic rainfall and higher
temperatures . But when it comes to
achievable changes, Mr Adesina seems
well placed to act on what lies within
reach, combining an encyclopaedic
knowledge of his country ’s agriculture
sector with a clear strategic vision.
While ministers’ portfolio’s are often
fast- changing, giving them limited time
to develop expertise in any given sector,
Mr Adesina has a strong background as
vice president of policy and partnerships
at the Alliance for a Green Revolution in
Africa (Agra ), and a decade at the
Rockefeller Foundation . He was
appointed by UN secretary-general Ban
Ki- moon as one of 17 global leaders to
spearhead the Millennium Development
Goals. His energy is palpable , and he
looks well positioned to engineer a
major turnaround in Nigerian
agriculture .
The change needed, he says, requires a
shift in mindset. “ We were not looking
at agriculture through the right lens. We
were looking at agriculture as a
developmental activity, like a social
sector in which you manage poor people
in rural areas. But agriculture is not a
social sector . Agriculture is a business .
Seed is a business , fertiliser is a
business , storage, value added , logistics
and transport – it is all about business .”
He wants to change the sector ’s image ,
putting it at the forefront of national
development . “ Agriculture is the future
of Nigeria. And agriculture that is
modernised , that is productive, that is
competitive . We must be a global
player ,” he says.
Nigeria’ s respected finance minister ,
Ngozi Okonjo-Iweala , speaks positively
about Mr Adesina’ s reforms to date –
especially in cleaning up the corrupt
fertiliser industry. Now , rather than
directly participating in the delivery
system for fertiliser , the government
leaves that to the private sector and
only provides the subsidy. This change
has tackled 40 years of corruption, and
ended it – Mr Adesina claims – in 90
days .
Ms Okonjo- Iweala says it has been
easier to work with Mr Adesina than
previous ministers. “It is not only about
doling out subsidies which do not reach
farmers ,” she says . “That was frustrating
for me the first time [I was finance
minister ]. Now he came and cleaned up
the fertiliser issues. ”
Nigeria is now seeking to add 20m
metric tonnes to the domestic food
supply by 2015 and to create 3 .5
million jobs through agriculture . This
requires more sophisticated thinking
about the value addition of individual
crops – cassava being but one example .
“ We are the largest producer of cassava
in the world, at 40m metric tonnes , but
I want us to become the largest
processor of cassava as well ,” Mr
Adesina claims . “We can focus on using
cassava for starch , dry cassava chips for
export to China, cassava flour to replace
some of the wheat flour that we are
importing . So we are restructuring the
space for the private sector to add value
to every single thing .”
Finance is the critical catalyst to growth,
and in Nigeria it has proven hard to link
the two. “ You find that only 2 percent of
all bank lending in Nigeria goes into
agriculture – a sector that is 40 percent
of GDP and 70 percent of employment .
The reason was because banks could not
find the money trail in the agriculture
sector ,” Mr Adesina says.
That is beginning to change, with banks
starting to look again at the
opportunities offered by agriculture –
which in part follows the reforms
implemented by Mr Adesina’ s
administration to root out corruption
and improve efficiency . Last year , his
ministry developed a facility with the
Central Bank of Nigeria – helped by
donor assistance from the UK , German
and US development agencies – called
Nirsal , an agribusiness initiative that
provides risk management, financing ,
trading, and strategic solutions.
The $50 m facility , which leverages
$ 3 .5 bn , reduces the risk of agricultural
lending by providing credit risk
guarantees and brokerage services to
buyers and sellers of agricultural
commodities , including structured buyer
forums. It also, selectively , buys on its
own account to bring stability to
markets . In addition , Nirsal offers
advice designed to connect suppliers
with downstream buyers.
This is part of a market-smart initiative,
rather than a heavy handed intervention
in the sector . “ With banks you cannot
beg them to lend because they are
taking care of their people ’s money , so
you create the value and they see the
value and lend ,” he says.
While banks have often had a high
perceived risk of lending to agriculture,
the terms can be competitive if the
sector functions well. Mr Adesina
worked directly with the managing
directors and chief risk officers of
Nigeria’ s banks in order to tackle what
he saw as a misperception of risk , at
least if the sector ’s flaws – including
inefficiencies and corruption – could be
cleaned up . “ What we have shown the
banks is that agriculture gives as high
and competitive a rate of return as
other sectors if structured properly . But
for banks to lend, we had to fix the
agricultural value chain. Now the banks
are all exploding on agriculture in
Nigeria. ”
The percentage of lending by banks to
the sector was just 1 percent in 2010 –
now it is 4 percent, with a target of 10
percent . Last year , banks embarked on
lending to seed companies for the first
time in Nigeria. “We did an assessment
at the end of the season , ” recalls Mr
Adesina . “ The central bank governor
asked the banks how much money did
you lose lending to these guys last year ?
All the banks said zero percent. This
year we expect the banks to lend $ 400m
to seed companies alone. The reason
their losses are zero is because we have
changed the way we structure our
agriculture sector .” The best performing
stocks in the Nigerian Stock Exchange
are now not banks, but agricultural
companies.
Crucially, it is institutional reform –
rather than simply heavier public
spending – which can best unleash
financing in the sector. “ I do not think
that throwing money at anything solves
problems . It is all about policy reforms,
creating incentives , getting the private
sector in there, getting financial markets
behind agriculture. Our goal is to
become an agriculturally industrialised
economy. Nigeria should be like Brazil ,
as far as I am concerned,” says Mr
Adesina .
“ Of course you need public financing of
critical things like infrastructure, roads,
and irrigation facilities – those are
public goods that governments are
obviously spending money on. But the
greatest way is through the private
sector .”
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