TBY talks to Dr. Akinwumi Adesina, Hon. Minister of Agriculture and Rural Development, on job creation, private investment, and facilitating lending to agribusinesses.

Dr. Akinwumi Adesina
Dr. Adesina graduated with a Bachelor’s Degree in Agricultural Economics from the University of Ife, and earned his PhD degree in Agricultural Economics in 1988 from Purdue University. Before being appointed Minister of Agriculture and Rural Development in 2011, he was the Vice President of the Policy and Partnerships Alliance for the Green Revolution in Africa. He was Associate Director for Food Security at the Rockefeller Foundation where he held senior leadership positions from 1998 to 2008; he also served as Regional Office Director and Representative for Southern Africa.

President Goodluck Jonathan launched the Agricultural Transformation Agenda in 2011, with the goal of adding 20 million metric tons of food to Nigeria's food supply, as well as creating 3.5 million jobs in the sector. How do you view the progress that you and your ministry have made regarding these goals?

The progress has been positive and our goals in terms of the volume of food to be added to the national food supply were exceeded in 2014, well ahead of the target date of 2015. Meanwhile, the Agricultural Transformation Agenda (ATA) has raised the prospects of farm employment significantly. Various activities at different levels of the commodity value chains have created job opportunities. In rice alone, the federal government has created over 360,000 rural jobs across Nigeria. And, with over 10 value chains, the increase in job openings spans farm labor in primary production and processing. It is my fervent hope that more will still be produced and further jobs created before the end of 2015.

How will the Staple Crops Processing Zones contribute to private sector investment in Nigeria's agriculture sector?

Nigeria's endowment of 263 billion cubic meters of water, a bulk of which comes from two of the largest rivers in Africa, are a great agricultural benefit. But much of these have not been used for the optimal production of food. Staple Crops Processing Zones (SCPZ) can greatly improve access to, and the unlocking of, this largely untapped potential. The SCPZs are new agricultural infrastructure-enabled zones that are being developed to attract agribusiness investors into rural areas. They address the infrastructure challenges and constraints of the agro-processing industry, drive social and economic impacts, offer a superior operating environment for downstream players and also create a new platform for private sector investment in agriculture. Food manufacturing companies are being attracted to establish themselves within these zones, bringing them closer to farmers and areas of high food production. The proximity among the various stakeholders will increase the tempo of business and production volume. This will create opportunities for stakeholders and improve their business status along the value chains. Fourteen SCPZs will be developed across the country and master plans have already been completed for six of them. A leading international company is considering investment of over $100 million for the establishment of a 65,000 MT starch plant in one of these zones. Dangote group plans to invest $1 billion in rice SCPZs to boost national rice production and processing capacity. The World Bank, the African Development Bank, and other development finance institutions plan to commit up to $1 billion towards the development of these zones.

Bank lending to the agriculture sector has risen from 0.7% to 5% of total bank lending within two years. What accounts for this, and what is its significance?

One major reason is a rising level of confidence in agriculture over the past three years due to the investment-friendly policies of the Jonathan administration, the de-risking of bank lending through a facility known as the Nigerian Incentive-based Risk Sharing in Agricultural Lending (NIRSAL), jointly developed by the Ministry and the Central Bank of Nigeria. Realizing that a bulk of their risk burden has been increased, and seeing the money trail in agricultural transactions, the bank thought it was time to become a player in the agricultural sector by lending to input suppliers, farmers, and processors. To improve financial access for farmers, we have taken bold steps. The NIRSAL reduces the risks associated with lending to agribusinesses and farmers. Agricultural lending as a share of total bank lending rose from 0.7 to 5% within two years. Bank lending to seed companies and small agricultural input retailers rose from zero in 2011, to $10 million in 2012 and $53 million in 2013. Bank lending to fertilizer companies rose from $100 million in 2012 to $500 million in 2013. It is remarkable that the default rate has been at 0% over the past two years. The reforms we have made are improving the prospects for Nigerian farmers, but also capturing the attention of external investors. Over the past 24 months, we have attracted $4 billion in executed private sector letters of commitment to invest in our agricultural sector. We have also received significant financial backing from the World Bank, the African Development Bank, the International Fund for Agriculture Development, the UK Department for International Development, the United States Agency for International Development, the United Nations Development Program, the Bill & Melinda Gates Foundation, and the Ford Foundation. To drive and provide much needed equity financing for small and medium-sized agribusinesses, the Federal Ministry of Agriculture and Rural Development, the Federal Ministry of Finance and the German Development Bank, KFW, have jointly established a $100 million equity and quasi-equity fund. Improved bank lending is a sign of growing confidence in the agricultural sector.

A large percentage of the sector is made up of small and medium scale agribusinesses. In which ways does the Ministry endeavor to support these medium and small agribusinesses?

In every ecology, the small, the medium, and the large creatures co-exist. Interventions applicable to each distinct category of agribusiness are currently being implemented. While we do not want to displace the smallholders, we see the urgency of promoting large-scale investors and making them produce. We are doing a rapid transformation of key agricultural value chains—from the farm to the table. To achieve these, we are working to create ecosystems in which small, medium, and large-scale farming systems not only co-exist but also flourish. We are focused on creating value added products from staple crops—through an aggressive import substitution program and other policy reforms to accelerate food production and agricultural resilience.

What is your medium term outlook for the agriculture sector in Nigeria?

It is important to harness the enormous human and natural resources that abound all over the country. Of the 84 million hectares of arable land in Nigeria, only 40% is presently cultivated. Nigeria's immense agricultural potential is a great asset for the nation in particular and Africa in general, with promises for food security when fully harnessed. The market potential for our agricultural produce remains under-utilized. While there is a huge market opportunity in the international arena, creating markets locally for our own farmers remains a task to be done. Nigeria's large pool of cheap labor is available to support agricultural intensification, while also offering a huge market for agricultural produce.