Nigeria targets agricultural output of N38.4tn by 2036
The Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NISRAL), has said by increasing hectarage and yield using fertilizers, seeds, adopting good cultural practices, the nation’s agricultural sector output is expected to hit N38.4 trillion by 2036.
According to the Managing Director and Chief Executive Officer, NISRAL Plc, Aliyu Abdulhameed, opportunities in the agricultural space is huge with just 43 percent of 84 million hectares cultivated, while over $22 million sizes of the investment is waiting to be harnessed by business leaders and investors in the agricultural space.. He spoke at a symposium on financing agribusiness organised by the Lagos Chamber of Commerce and Industry (LCCI), in Lagos.
Abdulhameed, who was represented by the Head, Balance Sheet Financing and Portfolio Management, Ernest Ihedigbo, said Nigeria must imbibe a good agricultural practice to have a share of the $5 trillion global agribusiness industry.He added: “In 2016, the value of agricultural production was N14.85 trillion, and if we are to increase yield by using fertiliser and quality seeds, we will add another N10.3 trillion. If we are to increase hectarage from the current 41 million hectares to about 48 million hectares, an additional, we will add another N7.8 trillion. All these activities if consistent would shoot the agricultural output to about N38.4 trillion by 2036.”
He said the agribusiness has been affected by broken value chains, perceived high risk, high transaction cost and inadequate funding, adding that the sector grew by 2.1 percent in an era where other sectors were struggling, and called on local and foreign investors to take advantage of Nigeria’s huge agricultural sector.
Earlier, the President, LCCI, Babatunde Ruwase, said the theme of the event tagged, “Making agribusiness bankable: Lenders and investors expectations” could not have come at a better time when there is an urgent need to diversify the country’s productive base.He said the World Bank projects that by 2030, the African food market will grow to be a $1 trillion industry, saying that Nigeria must scale up investments in improving agriculture yield and integrating the value chain over the next decade to effectively capture a significant share of the market.
He pointed out that agriculture financing in Nigeria is largely dependent on government funding, financial institutions, private investment and institutional funding.He noted that agribusiness has not enjoyed robust credit flow from financial institutions and private investor over the years partly because of the perception that projects in the value chain have longer payback period and relatively less profit margin.
Citing official data, he said agriculture attracted $169.37 million between April and June, which is mere three per cent of total foreign capital brought into the country, saying that during that period, bank credit to the agriculture sector was less than five per cent in the same period.
The Chairperson, Financial Services Group, LCCI, Mojisola Bakare, said despite laudable initiatives, credit to the sector remains largely stifled. She maintained that evidence shows that the total bank loans to the agric sector is only about four per cent of the total lending of commercial banks credit, which she said is below the Central Bank of Nigeria’s (CBN’s) seven per cent target.
“This outcome indicates that there are expectation gaps between the financial industry/owners of funds on one hand, and the agriculture operators/demander of funds on the other hand. Inability of the agribusiness owners to understand the metrics and risk criteria used by the financial institutions in assessing bankability and viability of agriculture and allied projects, inhibit access to finance,” she said.