Post COVID-19: Building Nigeria’s economy through agriculture
- 11 August 2020 / News / 140 / ABI 1
There is no doubt the coronavirus pandemic has led to significant impacts on life as we knew it. Between January 2020, when the World Health Organization (WHO) declared COVID-19 as a global pandemic and today, every aspect of life has been transformed into a mixture of chaos, confusion, and uncertainty. Within months, nations have had to deal with an unprecedented number of mortalities ever recorded in recent times.
A World Bank report projected a 2.1 percent decline in GDP growth for sub-Saharan Africa and a loss between US$37 billion and US$79 billion due to the pandemic. More alarming, according to the report, is that COVID-19 “has the potential to create a severe food security crisis in the region, with agricultural production contracting between 2.6 percent and 7 percent in the scenario with trade blockages.”
Sub-Saharan Africa, especially Nigeria, should come out of this pandemic with two-fold lessons to face the realities post-COVID-19 era will bring. These are reevaluating dependence on fossil fuels and seeking alternative sources of revenue generation. COVID-19 crisis may wipe out demand for fossil fuel according to a report by the International Energy Agency (IEA), the world’s energy watchdog.
The possibility of food scarcity has been forecast to be more dire than the direct impact of the COVID-19 pandemic. With an estimated 265 million people going hungry by the end of 2020, various governments need to focus on food production even as the race to manufacture a vaccine intensifies. A country like Nigeria, despite huge agricultural potentials, can still not provide cheap and affordable food for her growing population. With the COVID-19 pandemic, a bleaker outlook for food security in Nigeria has been predicted. Since Nigeria is not food sufficient, needless of being an agricultural products exporter, the country will be severely impacted by the lack of access to importation. Apart from the adverse impact on production across Africa, the supply chain has been impacted negatively as a result of restrictions on international movements.
An investment in agriculture at this stage is not only going to avert the possibility of famine in Africa, it is a gateway to revitalizing several dying economies. The agriculture industry is highly diversified, leading to an abundance of opportunities to build the economy and enhance the standard of living of millions of Africans. In several ways, the COVID-19 pandemic presents a great opportunity for African nations, especially Nigeria, to approach industrialization differently and explore its benefits through strategic investment in agriculture in a post COVID-19 era. After the pandemic nightmare is over, if the recommendations proffered in this article are adopted, Nigeria will have a golden opportunity to become truly independent and self-reliant. Nigeria must wean herself off the overdependence on crude oil and chart a new path to lay the foundation of economic reforms targeted at agriculture as the main catalyst, using innovation and local content development.
Farming is a major aspect of agriculture, which includes crops, poultry, livestock and fisheries. However, there are other important aspects of agriculture that are often overlooked. A great example is the agro-allied industry that relies on agricultural products. The growing demand for processed or packaged food directly correlates with the availability of agricultural products. Besides manufacturing capabilities of agro-allied companies, supply chain, logistics, transportation, storage, marketing, crowdfarming, circular agriculture, biorefining (e.g waste-to-energy, waste-to-chemicals) are some very essential income-generating opportunities that come with agriculture.
There is an abundance of literature and conversations about the importance of agriculture in Africa. However, there has not been a comprehensive approach required to drive investment opportunities in Africa, especially Nigeria. For instance, in response to the impact of COVID-19, the Governor of the Central Bank of Nigeria, outlined how the government was going to support agriculture through the InfraCo PLC, a 15 trillion naira fund management infrastructure to drive investment in logistics and transportation of agricultural products. As laudable as this investment is, it addresses just one of the ways investment opportunities can build the Nigerian economy. The government alone cannot provide the requisite investment needed to make agriculture a profitable venture and an economic-transformational force. Also, individual traditional farm ownership will not yield the right outcome if the scope of and approach to investments are not overhauled. This is crucial especially noting that while agriculture is the biggest employer in Africa, it is mostly populated by small farmers and the poor. Such a traditional approach to agriculture is not sustainable if food scarcity is to be adequately addressed within the next five years.
To address the challenges facing the growth of agriculture in Nigeria, as well as Africa, a comprehensive agriculture investment approach will include the following:
- Foreign Investment: It should not be surprising that foreign investment is the first recommendation we are making. Nigeria will benefit from foreign investment especially in the area of technology and large scale infrastructure. However, it is very crucial to emphasize that foreign investment must be bilaterally beneficial. The government must protect its human and natural resources from foreign exploitation, including the death of its local agriculture industry. For instance, the Chinese agricultural interests have been reported to exploit Nigerian local farmers in Ogun State and some states in the northern part of the country. Nigeria will only benefit from foreign investments if responsible public policies are in place.
- Government Investment: It is understood that governments do not directly produce or manufacture products, however, such thinking needs to evolve. It is not enough for the government to provide funding and policies that govern agricultural operations, it is very important for governments at all levels to directly invest in agriculture. This may be done through setting up public corporations or investing in joint ownerships with the private sector. This is different from a public-private sector initiative often touted as a buzz word for incentivising the private sector. This is running a business with government resources to generate income for the government and the governed. A great example is China, where its government-owned farms are becoming mega corporations which compete prominently on the global stage. Locally, the Oyo state government is making huge investments in transforming two farm settlements into commercial agricultural estates. This visionary investment redefines how governments should actively involve and invest in agriculture. The Nigerian federal government should convert some of its lands to agricultural hubs, paving the way for local governments to develop plans towards maximizing state and municipal lands for commercial agriculture.
- Commununal Investment: Land is a sacred inheritance for many communities in Nigeria. While it is important to respect the attachment many have for their ancestral land, it is equally significant to translate such attachment for more productive ventures. Local communities have experiences with crops and other agricultural products that they can produce for commercial purposes. The challenge has been funding. While there is no lack of land resources, however, the need for labor, fertilizers, storage, transportation, and other important resources has been a major concern. These challenges can be solved if communities focus on creating communal corporations that address key areas of need. For instance, farm owners can decide to specialize in particular products and form a company around it. Members of the community who are into transportation can form a company that addresses transportation needs. Another group can serve as a recruiting firm that employs locals who need jobs. Another group can form a purchasing company where they buy fertilizers and small-scale machineries that can make farming more profitable. Another group can form a marketing and logistics firm that is responsible for selling the products. This approach relies on mutual trust, since everyone knows everyone and local capabilities. The benefit of this investment strategy is that the collective efforts of the community provides leverage for bank loans, purchasing and marketing of their products, as well as reducing costs while creating opportunities for all involved.
- Institutional Investment: Banks and other businesses invest in diversified stocks, including agriculture. Universities and other higher institutions of learning make considerable investments in income generating ventures. Some religious organizations make investments in healthcare and education. Since all these institutions are making income generating investments, it is logical to argue that they can equally make direct investments in agriculture. Banks should not only provide loan instruments to businesses, their unique insights of the economy should be enough incentive to establish agro-allied businesses, just like they run insurance operations. Nigerian universities can leverage their skills in research and development as well as familiarity with host communities to create agro-allied investment opportunities. With about ten learning institutions primarily focused on agriculture and many others with formidable faculty of agriculture, a nagging question is what have these institutions produced? The Nigerian academia occupies a unique position in promoting nationalist agendas through research and policies. They can also turn their curricula to be more relevant by creating opportunities for undergraduates and postgraduates to apply theories to actionable practicals. As part of their annual assessments, undergraduates of agriculture should be able to start an agribusiness venture. Religious organizations will make more economic impact on the lives of their congregants if a portion of their income is divested in agriculture. Unemployed members can be gainfully employed by the business arm of their organizations. This will not only reduce unemployment, it will reduce excessive demands on the congregants.
- Wealthy Individual Investment: Only two of the top wealthiest people in Nigeria invest in agriculture, with Aliko Dangote making more money from his cement industry. Three of the 5 billionaires in Nigeria make their wealth majorly from oil and gas. With the decline in demand for oil and gas, the opportunity for these wealthy individuals to diversify their investments by actively investing in agriculture makes a very great business decision. For instance, a journalist turned rice farmer has been recognized as the richest rice farmer in Nigeria by Forbes. In 2017, Indonesia earned US$18.4 billion from palm oil compared with US$12.6 billion from oil and gas. Not only will these wealthy investors grow their wealth, their investment in agriculture will directly improve the economy through employment and export revenue. One does not need to be a billionaire to invest in agriculture, though wealthy investors have readily available funds and resources to invest in commercial agriculture. Perhaps, we can add that one way for Nigerian celebrities in music, entertainment and sports to give back to their fans is to provide job opportunities, especially through their investments in agriculture.
- Crowdfarming: The adoption of crowdfarming in Nigeria has led to significant improvement in agriculture. With about 20 billion naira sourced through crowdfunding, leading crowdfarming platforms are using technology, research and networking to solve the problem of the lack of adequate financial investment and capital. Nigerians in the diaspora make significant contributions to the Nigerian economy through their remittances. In 2018, they remitted US$23.63 billion, amounting to 6.1% of the GDP. Crowdfarming could be a great platform to harness the economic power of Nigerians in the diaspora. It is important therefore that such platforms are popularized, standardized and regulated to prevent phony operators and scammers from exploiting such a laudable and innovative concept.
- Agrocentric Strategic Investment: One sector of the US economy that remained very critical as COVID-19 began to shut the country was transportation and logistics. For obvious reasons, more than 80 percent of the economy was moved online, creating a huge demand for the movement of products to consumers. Amazon made serious investment in its own transportation and logistics because shippers like USPS, FedEx and UPS could not meet up with its growing demand to keep a 24 hour delivery promise to its prime members. While every organization cannot invest in agriculture, more organizations are needed to provide strategic investments in areas that will enhance the growth of agriculture. One opportunity area is transportation. For instance, the Norwegian Opera’s ORide investment which was set to revolutionize bike rideshare in Nigeria prior to unfavorable state policies can be repurposed for moving agricultural products. Also, transportation companies that provide inter-state or regional commutes can diversify into moving products from farm to consumers. This should also include refrigerated trucks which will provide storage and preservation of fresh products. Storage is another challenge farmers face. A strategic investment opportunity is to create dedicated storage facilities near farmlands, thus reducing the cost of moving agriculture products before they are ready to be delivered for consumption as well as cutting down waste from rotten farm produce.
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