Optimizing the benefits of agriculture to transform Nigeria

Developing Nigeria’s agriculture sector has left the realm of political sloganeering. The government’s diversification agenda, succinctly articulated in the Economic Recovery and Growth Plan, is expected to focus attention on this important sector and drive its growth.

While the country remains ‘a huge investment opportunity’, the path to total recovery, most people agree, is to focus on new growth areas. The National Bureau of Statistics (NBS) last year highlighted such areas to include textile production, fishing, metal ore mining, agriculture and health and human services.

Agriculture, for obvious reasons, has gained the most attention. Responsible for over 75 percent of the growth in the non-oil sector, agriculture occupies a priority standing as a key driver of growth, wealth formation, revenue generation and poverty reduction. The sector provides employment for over 70 percent of Nigerians, mostly in the rural areas where more than 80 percent of the population dwell. In addition, over 75 percent of Nigeria’s total land area (about 68 million hectares) is arable. Resuscitation of the sector would also contribute immensely in reducing rural urban migration, and minimize the challenges this triggers in urban centres.

 Undoubtedly, agriculture has a huge potential to transform Nigeria’s economy as well as diversify it away from its heavy dependence on the energy sector. However, an estimated 90 percent of Nigeria’s food requirement is produced by small-scale farmers who constitute the majority of the nation’s poor. A myriad of factors are blamed for this ungainly condition, both natural and man-made. Key is the lack of access to finance and the resultant inability to invest in basic farming inputs, such as seedlings, fertilizers, implements and irrigation. As a result, their yields have remained largely stagnant, leading to pervasive hunger and poverty. Similarly, little or no commercial financing is available to those aspiring to build businesses that could enhance food production and enable farmers to earn sustainable profit.

The future of agriculture in sub-Saharan Africa, and Nigeria in particular, is clouded with several uncertainties that include increasing resource scarcity, heightened risks from climate change, higher energy prices, demand for bio-fuels and questions about the speed and depth of technical progress. However, the growth potential far outweighs the challenges. The foregoing, said Dr Demola Sogunle, chief executive at Stanbic IBTC Bank, makes it imperative for extensive collaborations and investments to drive growth of the sector.

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Such collaborations, involving both the public and private sectors, would help in creating an enabling environment, developing requisite infrastructure, safeguarding investments, reducing bureaucratic bottlenecks and motivating local and international investors. The large share of agriculture in Nigeria’s GDP suggests that strong growth in the sector is necessary for overall economic growth. “There is a need and an opportunity for investment that will develop the middle ground in Nigeria’s agriculture. Africa has enormous natural potential and the continent has to unlock the potential in order to reap the benefits of its natural resources,” Jerry Gushop, Head of Agric Banking at Stanbic IBTC Bank stated.

By positioning agriculture as a business, enabling policies must consequently be put in place to establish a commercial scale agric sector in the country. Describing agriculture, SME, construction, infrastructure, power, ICT and mining as crucial for economic revival, Sogunle said what is required now is putting in place the right policies and working in collaboration with government to promote an enabling environment that would attract foreign investors who would invest in the critical sectors and ultimately leading to private sector-driven growth. A vibrant and liquid financial market is imperative, he said, because this is what will attract the capital needed to drive growth.

Surveys and investment trends have shown that despite the weak economic conditions, multinational companies are very much interested in expanding into Africa due to the higher growth rates, evolving democratic culture and improving policy and legal frameworks. “There are a lot of positive moves happening in the sector and there are superb growth opportunities in the market. What they require are proactive policy changes to support the opportunities,” Gushop stated, adding that Nigeria is already on the right path.

In tapping into the identified lucrative agricultural opportunities, an institution like Stanbic IBTC Bank has developed a medium-term model through the articulation of a medium term (3-year) vision to become a full-spectrum African agricultural company within Stanbic IBTC Holdings PLC and the Standard Bank Group. “When we say Africa is our home and that we drive her growth, it is our responsibility to extend ourselves beyond just banking: we must add value by providing exposure, information and our expertise to our clients to foster an environment that facilitates their growth and success,” Gushop added.

Stanbic IBTC Bank has a competitive agricultural advantage in view of its strategic alliance with Standard Bank Group through the provision of tailor-made agricultural banking offerings to tap the myriads of bankable opportunities and prospects in the agriculture space in Nigeria engendered by the ongoing agricultural transformation agenda of the government. Stanbic IBTC Bank is committed to the mechanization of Nigeria’s agriculture sector. “We understand the needs of everyone along the agriculture chain and the solutions to the sector’s needs.”

Stanbic IBTC is driven by the conviction that opportunities exist to provide end-to-end banking solutions for agriculture in which the bank can leverage and cross-sell a full suite of products and services, from traditional commercial banking and lending products to crop and weather insurance products. In addition, Stanbic IBTC Bank is growing its branch network in order to bring this suite of products closer to Nigerians. Many of the new branches are situated in agrarian communities, thereby bringing the bank closer to farmers, enabling easier access to finance and other banking services.

The challenge of financing agriculture, experts have said, is more than just the provision of finance. No doubt finance is very critical but it is also about providing complete solutions to smallholder farmers to ensure long-term sustainability, food security and higher standards of living. Through diligence in pursuing this objective, Nigeria’s agric revolution can kickoff on a sustainable trajectory.