Relaunching Nigeria’s agric revolution with AfDB’s agro-industrial processing zones
Industrial and agricultural revolutions have always been at the centre of most agro-economic policies of the government with the objectives of diversifying the base of the economy using crude oil as a springboard.
However, poorly conceived and hurriedly designed strategies and grossly inadequate implementation have impeded success of such policies, and one of the consequences is a mono-cultural economy that has made the country a gross importer of food and industrial products, with high inflation rate, gross unemployment among youths, extreme poverty and struggling industrial sectors.
However, the African Development Bank’s (AfDB’s) Special Agro-Industrial Processing Zones (SAPZs), espoused by President of the bank, Dr Akinwumi Adesina, who was a former Minister of Agriculture and Rural Development with vast understanding of the agro-economic space, appears to present a ray of home as far as agro-industrial revolution is concerned.
The first phase of SAPZs
The first phase of SAPZs will be implemented in seven participating states. In it, construction is expected to augment value chain commodities across participating Cross River State (cocoa, rice and cassava), Federal Capital Territory (beef and dairy livestock), Imo State (beef and dairy livestock), Kaduna State (tomato, maize, and ginger), Kano State (rice, tomato, groundnuts and sesame oil), Kwara State (livestock), Ogun State (cassava, rice, poultry and fisheries) and Oyo State (cassava, soybean, rice).
The programme has four units of supporting the development of enabling climate-adapted infrastructure for agro-Industrial Hubs (AIHs); improving agricultural productivity and enterprise development to enhance agricultural value chains and job creation in the SAPZ catchment areas; supporting agro-industrial zone policy and institutional development and programme coordination and management.
Expected outputs of the SAPZ in the first phase include, development of infrastructure for eight Agro-Industrial Processing Hubs (AIHs), 15 Agricultural Transformation Centres (ATCs), 2,300ha of irrigated farmland and farm to market access roads; supply of certified agricultural inputs and extension services; skills development for farmers and Micro, Small and Medium Scale Enterprises (MSMEs), an updated agro-industrial zone policy and establishment of regulatory institutions/special regulatory regime.
The goal of SAPZs project is to increase household incomes, foster job creation in rural agricultural communities, especially for youth and women, and enhance food and nutritional security in Nigeria.
The development objective is to support inclusive and sustainable agro-industrial development in Nigeria.
As designed, SAPZ interventions will seek to enhance the competitiveness of selected value chains. This will be achieved through increased productivity, aggregation and reliable supply of quality raw materials, value addition, market access and private sector investment.
The first phase will be implemented over five years (2022 –2026). The total cost for the SAPZ in this phase is estimated at $538.05million net of taxes. AfDB will provide an ADB Loan of $160 million (29.7 per cent of total cost) together with an Africa Growing Together Fund (AGTF) loan of $50 million (9.3 per cent). The Islamic Development Bank (IsDB) and International Fund for Agricultural Development (IFAD) will provide parallel co-financing of $150 million (27.9 per cent) and $100 million (18.6 per cent), respectively.
Additional resources ($60 million, 11.1per cent) will be mobilised through the Green Climate Fund (GCF) by IFAD from the IGREENFIN initiative. The Federal and State governments will contribute $18.05million (3.4 per cent) both cash and in kind.
According to the design, the SAPZ programme is aligned to the National Agricultural Technology and Innovation Plan (NATIP) 2021-2024 and the National Livestock Transformation Plan 2019-2028. It will support economic and social development programmes of the Federal Government of Nigeria (FGN) and the participating states, and the FCT.
It will also contribute to rural infrastructure development, improved access to agricultural markets, increased farm productivity, the adoption of agricultural technology, climate smart agricultural production and processing practices, increased value addition and agro-processing, increased skills acquisition and job creation, for all actors along the value chain, including the smallholder farmers, women and youth.
Specific expected benefits
The SAPZs Programme in Nigeria is well-aligned with the Bank Group’s 10-Year Strategy (TYS) 2013-2022, as it relates to food security, private sector development and inclusive growth. The programme will help to grow Nigeria’s agro-industrial base in priority commodities through the provision of infrastructure and create sustainable opportunities for employment, particularly for the youth and women, and boost entrepreneurial activities along the value chain.
These are critical for the country to transcend the primary stage of agriculture into tertiary stage as the population becomes greater and needs for food and social security become more pronounced.
Hope for economic recovery and industrialisation
Nigeria’s economy entered a recession in 2020, reversing three years of recovery, largely due to the fall in crude oil prices and containment measures to fight the spread of the COVID–19 pandemics. Not only that, inflation rose from 11.4 per cent in 2019 to 12.8 per cent in 2020, fueled by higher food prices due to constraints on domestic supplies.
The agricultural sector is constrained by low crop yields, high post-harvest losses (30%-50%), low value addition and acute shortage of infrastructure (especially energy and transportation) which inhibits investments by the private sector to spur industrialisation of its agriculture sector. This has resulted in weak competitiveness (in quality and in pricing), a rising annual food import bill, high levels of poverty, and low private sector investment in agro-industry.
The unemployment rate is high and increasing – between 2018 and 2020, it increased from 23.1 per cent to 33.3 per cent overall and from 29.7 per cent to 42.5 per cent amongst youth (age 15 -34 years).
However, it expected that the bank’s support to this programme will help develop infrastructure, promote private sector investment in rural areas, and provide requisite skills development, including youth empowerment, which will eventually change the narratives of the negative statistics.
In addition, the SAPZ programme is expected to support the country to ensure the inclusivity of many Nigerians in agricultural value chains. The bank’s support would help build better and more resilient infrastructure and explore green growth opportunities to attract climate financing. Potentially, SAPZs could create opportunities for strong and sustainable growth, and reduce spatial inequality.
The SAPZ design
The component one, Infrastructure Development and Agro-Industrial Hubs (AIHs) Management (AfDB financing up to $144.97M) will provide the enabling economic infrastructure (roads, water and sewage system, energy and optic fibre, etc.) for the zones, ready for the private sector businesses to acquire plots and operate their specific processing facilities.
It also entails the construction and/or upgrading of agro-industrial hub infrastructure, including office buildings, training centres, general services layout (fencing, internal and access roads/parking, drainage, power supply, water, sewerage, effluent management, health-and-safety), specialised services (quarantine, quality control labs/certification centres, breeding centers), business support services (administrative, knowledge/ICT/ procurement/ employment centers), and activities to implement the Environmental and Social Management Plans (ESMP).
Under this component, the Nigeria Sovereign Investment Authority (NSIA), in collaboration and consultation with the Executing Agency, the participating states and the FCT, will undertake an advisory and monitoring role in the engagement of the Transaction Advisers, Design Consultants and Contractors as well as the development of Agricultural Transformation Centers (ATCs) under Component 2 of the programme, or as agreed amongst the parties.
In the second component, Agricultural Productivity and Production, AfDB will support with $46.07 Million, and this component seeks to boost the supply of raw materials in the production areas that are in proximity to the AIH being developed under the first component.
It will support farm-level productivity, enhance infrastructure in the zones, including irrigation schemes, rehabilitation, land development and water supply, and the development of Agricultural Transformation Centers (ATCs) and Aggregation Centers (ACs).
These centres will be part of the SAPZ Master Plans developed under Component 1 and strategically located within the farming communities around the AIH and would be used for the facilitation of farmers’ access to essential inputs such as quality seeds, agro-chemicals, farm mechanisation/digitalisation and primary handling facilities. Ownership of the ATC’s lies with the State governments but will be under the management of a facility manager. Feeder roads would further improve access to the production zones, ACs and ATCs. Farmers will be trained on good farming practices including climate smart agriculture, quality requirements, testing and conformity standards and food safety. Farmers would also be provided with access to agricultural inputs and financing through digital applications. Irrigation would be put in place in specific areas.
Information and Communication Technology (ICT), seed system of high-yielding and climate-adapted crop and livestock varieties, training, registration and financing of “last-mile” agro-dealer networks, an electronic wallet to directly support producers with smart government subsidies to offset some of the costs of inputs, especially fertiliser and seeds, and farm advisory services and R&D would be part of the component.
Farm Input Growth Enhancement and Resilience Support: Access to affordable fertilisers, improved seed and crop protection products (CPPs) such as herbicides, fungicides, insecticides, etc., by farmers are key to raising agricultural productivity, and the component would emplace the scheme as experimented in Nigeria in the former President Goodluck Jonathan’s administration.
Also, a platform, the Farm Inputs Growth and Resilience Enhancement Support Program, to facilitate delivery of fertilizer, seeds and crop protection products (CPPs) to farmers is also part of the component.
The third component, Policy & Institutional Development (of which AfDB is financing $6.75 million), entails support for improving enabling policy, legislation and regulations for agro-industrial zones in Nigeria; enabling business environment and legal systems to support private sector investment, including one-stop shops, digital infrastructure, customs offices, immigration support, land access, contracts and permits in the AIH; investment promotion, branding and marketing of the agro-industrial zones; and capacity building for staff of relevant public institutions, among others.
The component will also develop a communications and market branding strategy for the Nigeria SAPZ scheme to raise awareness, and undertake annual investment promotion events to attract local and international investors to the respective AIHs and ATCs. This component will undertake a market sounding exercise for each of the AIH locations to gauge private sector appetite and interest towards investing in the selected AIH, take into consideration investor requirements with regards to the development of the sites, and required incentives from the private sector perspective.
The fourth component, tagged Programme Coordination and Management will see AfDB financing up to $12.22 million, and this component will support the establishment of a Special Delivery Team within Federal Ministry of Agriculture and participating state implementing units at state level and the FCT Implementation Unit (FCTIU).
Other services to be supported include training of programme officers, and necessary studies, including the development of other SAPZ phases and financial/technical audits. Support will be provided to oversight structures to be established at the Federal and State levels.
The participating state governors have expressed optimism in the programme, with most of them saying it would boost employment, agricultural productivity, internally generated revenue and food security.
Ogun State governor, Dapo Abiodun, said the state is the best to service Lagos and the international market in terms of finished and semi-finished products, and hence the appropriateness of an agro-industrial processing zone.
“We have the largest forest reserves. We are the number one producer of cassava and poultry in Nigeria. This agro-industrial processing zone will help aggregate the produce and streamline them for the value addition and export. This will lead to reduction of unemployment. Agriculture is the largest employer of labour.”
Also, Kaduna State governor, Nasir El-Rufai, commended the bank for the initiative and financial support, saying the state is mainly agrarian. He admitted that the most prominent economic challenge of the state is job creation, and expressed optimism that the agro-industrial processing zone, when fully functional, would catalyze primary production, processing and international trade, which, in turn, would create millions of jobs along the chains.
Oyo State governor, Seyi Makinde, also expressed the belief that the processing zone would complement agricultural efforts of the state.
He said the has comparative advantage in agriculture and agribusiness, and with the agro-industrial zone would boost the state efforts.
Getting youths involved in agriculture is a way of keeping them off the street and the labour market, and a reliable means of reducing insecurity in the state, Makinde admitted.