Africa spends US$35.4bn on food imports annually, despite being home to 65% of the world’s undeveloped arable land. Unless something drastic is done, demographic factors such as population and urbanisation, which bring about increased demand for food and changing consumption patterns, are expected to raise Africa’s net food import to over $110bn by 2025.
With this scenario in mind, the African Development Bank’s (AfDB) strategy, ‘Feed Africa: Strategy for Agricultural Transformation in Africa 2016-2025’, which seeks to transform agriculture into a competitive and inclusive agribusiness sector, is commendable. The strategy was released in May 2016 as one of AfDB’s ‘High 5’ priorities for its 2013-2022 strategy for transforming Africa. The other priorities are ‘Light Up and Power Africa’, ‘Industrialise Africa’, ‘Integrate Africa’ and ‘Improve the Quality of Life for the People of Africa’.
Feed Africa aims to drive transformation by prioritising selected agricultural commodities and agro-ecological zones in order to achieve self-sufficiency in commodities such as rice, wheat, fish, palm oil and cassava; and move up the value chain in key export-oriented commodities, including cocoa, coffee, cotton and cashew. The amount of investment needed for the realisation of this goal is estimated by AfDB at $315-400bn, and both the public and private sector have important roles to play.
Prior to the release of the AfDB agricultural transformation strategy, countries across Africa have grasped the value of agriculture for their economies, but have not fully capitalised on it. While agriculture is integral and accounts for more than 60% of jobs on the continent, productivity and value add have been low in many African countries.
With the slump in natural-resource commodity prices, more attention has been fixed on the agriculture sector as a sustainable source of economic diversification and foreign exchange earnings. However, for agriculture to reach its true potential, funding, capacity building, infrastructure, research, technology development, private sector-led initiatives and an empowering agricultural environment are key enablers. What are African countries doing to boost these? To what extent are they addressing the barriers and impediments to growth in the agriculture industry? How can they ensure that Africa’s goals – meeting basic food and nutritional needs; inclusivity; upward movement in the agriculture value chain; and job creation – are achieved?
The case for Nigeria’s agricultural transformation
Before the discovery of crude oil, agriculture was the most important sector in Nigeria. It accounted for 50% of GDP and more than 75% of export earnings, including cash crops such as cocoa, groundnut, palm oil and rubber. At the time, Nigeria could feed itself. By the mid-1960s, Nigeria began to move from self-sufficiency in basic foodstuffs to import dependency. Now, Nigeria spends more than $11bn on food imports.
With advantages such as arable land of 37.3%, and agricultural land of up to 77.7% – according to the World Bank – abundant water supply, and a favourable climate, Nigeria can rise again in the agricultural sector, provided it utilises its small-scale farmers; promotes farming as an employment opportunity; partners with the private sector; and provides significant investments in infrastructure and technology.
Paving the way
Over the years, many administrations in Nigeria have initiated several strategies to boost the agricultural sector. These have included the ‘National Accelerated Food Production Program’, ‘Operation Feed the Nation’, the ‘River Basin Development Authority’, ‘Green Revolution’ and the ‘Commercial Agricultural Development Project for Nigeria’.
In 2011, the administration of Goodluck Jonathan, former president of the country, launched the ‘Agricultural Transformation Agenda’ (ATA) to promote agribusiness, private sector investment, job creation, productivity, value add, market access, and financing for farmers. The ATA was seen by many as a step in the right direction for the agricultural sector. It helped revamp the overtly corrupt fertiliser- and seed-distribution business through the ‘Growth Enhancement Support’ (GES) Program. It also focused on private sector investments and provided marketing reforms and innovative financing.
In June 2016, the current administration, through the Federal Ministry of Agriculture and Rural Development, released its policy and strategy document for its ‘Agriculture Promotion Policy for 2016-2020’. The policy hopes to build on the success of the ATA and close key gaps, specifically the reduction in food imports and improvements in foreign exchange earnings from agriculture. This aligns with the current administration’s reiteration that the Nigerian economy needs to diversify away from an over-dependence on the oil and gas sector. The policy also falls within the objectives of the AfDB’s Feed Africa Strategy, seeking to improve productivity; develop input and output market structures and incentives to capitalise on increased production; and promote private sector engagement and investment.
To achieve increased productivity in Nigeria, there is a need for improvements in input supply to ensure that fertilisers, chemicals, seeds and planting materials get to the farmers. For instance, the use of fertiliser deep placement (FDP) technology – which increases crop yields by an average of 18% while reducing fertiliser use – has produced good results. Notore Chemical Industries is involved in a public-private partnership with the Nigerian National Program for Security to promote this technology. With companies such as Indorama producing fertilisers locally, as well as plans by Africa’s richest man, Aliko Dangote, to build a fertiliser plant in the country, FDP holds great potential for Nigeria’s agricultural transformation.
The challenge is ensuring that information, access, and financing for this technology reach small-scale farmers. In the 2017 budget, President Buhari’s government intends to devote more resources to agricultural needs – such as fertilisers, pesticides and training for less educated farmers – that will enable the procurement of input supply.
Reducing post-harvest losses and increasing investment
With regards to output market structures and incentives, post-harvest losses are critical barriers to closing key gaps. The lack of storage, transportation and processing facilities has caused much wastage. For instance, demand for tomatoes is put at 2.2m tonnes while supply is 0.8m tonnes. However, actual production is 1.5m tonnes, with 0.7m tonnes lost post harvest. Nigeria spends $1bn importing tomato paste. To address this problem, Dangote has invested $2.5bn in a tomato-paste factory, a decision that will impact 40,000 small-scale farming families. The investment is part of Nigeria’s ‘Staple-Crop Processing Zone’ (SCPZ) program to identify agricultural production clusters, which in turn could attract private sector investments for processing agricultural produce.
Closing key gaps requires greater investment. As at 2015, the domestic private sector provided between 60-70% of investment commitments. Members of the Nigerian Agribusiness Group had made commitments totalling $1.8bn in investments across 22 of the 36 Nigerian states. Investment opportunities across key crops include rice, wheat, tomato, oil palm, and cocoa. For instance, Nigeria needs 4m tonnes more than the 2.3m tonnes currently being supplied. Investors such as Olam have established an integrated rice plant with the capacity to mill 36,000 tonnes per year in a 10,000ha farm. Dangote has announced plans to plant 150,000ha of rice to produce almost 1m tonnes for the domestic market.
Both companies are also involved in outgrower schemes that provide small-scale farmers with quality inputs, improved agricultural practices, technology and links to markets. The Bill and Melinda Gates Foundation is also funding projects to help small-scale farmers improve rice productivity.
In conclusion, a partnership with the private sector has proven to be beneficial for agribusiness in increasing productivity and strengthening input and output market structures. For the private sector to continue to be motivated to invest, the country would do well to speed up its attempts at solving identified challenges. Nigeria, projected to have a population of 440 million people by 2050, needs to take food sustainability seriously. Fortunately, the country has what it takes to meet the increased demands for food and consumption patterns. Its agricultural policies, if properly implemented, are capable of making Nigeria food-secure and prosperous. By harnessing the opportunities and addressing the constraints identified, the true potential of agriculture will be realised.
Dr Adefolake Adeyeye is a research fellow of the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation.