Sector Focus
T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
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T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
These initiatives target key crops including cassava, tomatoes, rice, cotton, fisheries, maize and cocoa. Majority of the risks linked to Nigerias agriculture sector have been addressed by the government through these initiatives. External organisations and governments such as the World Bank, US government and the G20 have already invested in Nigerias agriculture sector.
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T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
Nigerias Agricultural Transformation Agenda; Nigerian Incentive based Risk Sharing System for Agricultural Lending (NIRSAL); Enhancing Financial Innovation and Access (EFInA); and, Nigerian Strategy Support Programme (NSSP).
Nigerias Agricultural Transformation Agenda is aimed specifically towards the private sector. Investors will benefit from directly selling farmers inputs, being involved in key sectors e.g.: fertilizer, agricultural equipment, etc.; and representing the agricultural sector to the government. Nigerian Incentive based Risk Sharing System for Agricultural Lending (NIRSAL) This agenda benefits from a 450 billion Naira credit portfolio set up by the Central Bank of Nigeria. NIRSAL benefits investors by increasing liberalisation in the market therefore allowing the private sector to grow more rapidly, increasing access to credit and lowering interest rates. Investors will also be able to benefit from a N1 billion investment into Micro Finance Banks (MFBs) in rural areas this initiative makes it easier for investors to do business in rural areas as the indigenous supply chain will benefit from much improved access to banks, credits and loans. The MFBs will also offer strong incentives and technical assistance, and
there will be further accessibility to private insurance through deregulation of insurance sector. Enhancing Financial Innovation and Access (EFInA) is a financial sector initiative that promotes financial inclusion in Nigeria. EFInA is funded by the UK Government Department for International Development (DFID) and The Bill & Melinda Gates Foundation. The initiative supports and facilitates the emergence of an all-inclusive and growth-promoting financial system in particular its support for promoting financial access through catalysing the provision of appropriate services at an affordable price to those who are currently excluded will support the indigenous supply chain and provide investors with more reliable access to markets. Nigerian Strategy Support Programme (NSSP) The NSSP is focused more on policy making in the agriculture sector. Investors will have access to further detailed knowledge about the sector through data and tools for analysis which is provided through the Agricultural Policy Support Facility (APSF). Through the above initiatives, Nigeria is illustrating its commitment in achieving its Millennium Development Goal of eliminating poverty and promoting food security.
T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
The goal is to increase agricultural output by 160% from $90 billion in 2011 to $256 billion in 2030. Investors will benefit from the countrys renewed focus on this sector and the potential to participate in assuring food security both in Nigeria and beyond.
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T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
rate of return (IRR) of 19% and could break even after 4, 5 years. The key crops identified are grown in areas best suited for producing high quality products. For example, cotton production is more in the Northern part of the country and in states such as Zamfara, Katsina, Kano, Jigawa; while maize production is over central Nigeria and in states such as Niger, Kaduna, Bauchi, Gombe and Borno; and cassava and cocoa production is more in the Southern part of the country in states such as Ogun, Lagos, Osun, Ondo, Edo, Enugu, Ebonyi, Kogi and Anambra. Product / crop selection could therefore influence heavily where investors choose to operate their businesses.
the country. Their attacks are mostly in the northern part of Nigeria and their overall goal is to create an independent state in which Sharia law is the basis of its constitution. These attacks are mostly targeted towards government and security officials however the government has since tried to resolve problems related to the Boko Haram. There have also been reports earlier this year of ships being attacked by pirates off the coast of Nigeria and Benin. This is problematic as it affects trade in the Gulf of Guinea however to reduce this risk, Nigeria and Benin part take in joint naval patrols. Economic Risk Of concern would be possibility of financial market weakness as the state influences credit allocation and the economy is largely cash based, as a consequence only 9% of the population have bank accounts. The prevalence of poor infrastructure and road networks does hinder the economys growth and is one of the main reasons why agricultural goods are thrown away. Poor irrigation facilities could also limit the agriculture sector to be the most productive only in wet seasons. It is worth noting that Dr Adesina the Minister of Agriculture in Nigeria, has allocated N60 billion to the
Possible risks
Despite these initiatives being incredibly advantageous to Nigerias economy and its investors, there are some risks that need to be considered. Political Risk - Markets could become restricted or limited because of government involvement. Terrorism is also a concern as recently the Boko Haram, an Islamic group, has increased their presence in
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T: +44 20 8204 4962 | F: +44 20 8206 2860 | E: info@platinumintegrations.com | W: www.platinumintegrations.com | 16 Freetrade House, Lowther Road, Stanmore, Middlesex HA7 1EP
improvement and development of irrigation systems. Technological Risk There is limited but improving access to technology. This could impact research potential and the improvement of seeds in the short terms and potentially have implications for relations with farmers and farmers associations. The Federal Government is aware of above risks and is working hard to implement the initiatives discussed in this article. These initiatives have proved to be created by an organised and determined government, who plan to have Nigerias agriculture production self sufficient by 2015 and export 80% of its total output by 2020. These targets are achievable and realistic for three reasons:
Firstly, the country has the necessary components such as a wonderful topography and excellent climate to grow crops that are in global demand. Secondly, the Federal Government has the right attitude. These initiatives are fully supported by the government while agribusiness is becoming a priority for its economic growth.
Lastly, the country has excellent support from external organisations and governments such as the G20, US government, DFID, the Bill and Melissa Gates Foundation and the World Bank, who all believe it will achieve its potential.
Conclusion
Overall, Nigeria is an investors dream and with the rapid growth rate of its agriculture sector, it is destined to become a model country for the rest of Africa.
Platinum Integrations
Platinum Integrations Ltd (Pi) is a one stop international consulting firm that assists companies wishing to do business in Africa. We provide International (or aspiring International) companies with assistance in trading with Africa. To discuss your companys strategy for entering or expanding in Africa please call +44 20 8204 4962 or see our website at www. platinumintegrations.com.
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