WEF_GrowAfrica_AnnualReport2014

2013 in Review 2013 in Review
2013 action for transformation
SPOTLIGHT
E-Wallet vouchers – Subsidy overhaul eliminates
graft in input distribution and boosts food security
Leadership and alignment
Infrastructure and policy
•¡
Strong support and leadership from the
Honourable Minister of Agriculture and
Rural Development.
•¡
A multi-stakeholder “Champions Group” is
being established.
Strategy setting
•¡
The ATA provides strong strategic and
operational direction, including defining
priority value chains and launching Staple
Crop Processing Zones.
•¡
A CAADP Investment Plan is in place.
Investment pipeline
•¡
A FMARD Agribusiness and Investment
Unit (AIU) has been established to promote
and facilitate sectoral investment.
•¡
Government leadership has stimulated
domestic and international interest to
inherent Nigerian market opportunities.
•¡
Value-chain partnerships are developing
broadly, including an influx of rice millers.
•¡
There are currently not enough commercial
growers of high-quality cassava to
adequately support cassava flour milling.
Risk mitigation and financing
•¡
Minimal government provision of
infrastructure means many companies must
finance their on-farm infrastructure and
power generators.
•¡
Lack of standardised government
procedures can add costs to doing
business, for example, Customs or the
National Agency for Food and Drug
Administration and Control (NAFDAC)
are not fully aligned with FMARD. More
generally, permit granting can be slow and
exposed to corruption.
•¡
Price volatility and an uneven playing field
are caused by smuggling and by import
waivers for select producers.
Delivery and implementation
•¡
FMARD and the AIU demonstrate strong
capacity for coordination and delivery of
initiatives and reforms.
•¡
No functional inter-ministerial group
exists to coordinate agribusiness enabling
environment improvements, and there
appears to be limited communication
between ministries and agencies.
•¡
Demand exceeds government capacity to
facilitate investments and provide linkages
to partners or financing. In some cases, this
raises possibility of scaling down planned
investment.
Since 1967, the Government of Nigeria has had a
policy intended to deliver subsidised inputs, particularly
fertiliser, to help farmers improve crop yields. Under the
longstanding programme, the Federal Government was
the sole procurer of fertiliser, which it then re-sold at
subsidised prices to distributors for delivery through a
complex chain for eventual sale to farmers from Wardlevel
warehouses. Farmers expected to be charged a
fixed and heavily-subsidised price, despite significant
differences in handling costs and market forces across
the country.
However, the subsidy policy suffered from multiple
problems, including wide-scale corruption and
inefficiencies. A massive diversion of supply benefitted
middlemen and rent-seekers, while some fertiliser
was smuggled to neighbouring countries. The lengthy
and cumbersome bureaucratic tendering process
often caused late delivery of inputs, and despite the
considerable fiscal burden to the government, the
impact on agricultural productivity was mixed at best.
Between 1980 and 2010, over $5.4 billion was spent
on fertiliser subsidies but no more than 11% of farmers
received these fertilisers, so that over $4.8 billion
was estimated as lost to corruption. Furthermore,
the system displaced the private sector in the inputs
distribution value chain.
In 2012, the Growth Enhancement Support (GES)
programme began shifting to an industry system that
incorporates private agro-dealers as the purchasers of
fertiliser (and seed) from established fertiliser suppliers
(rather than the government), giving them responsibility
for distribution of the inputs at agreed-upon centres
in local communities. This afforded millions of farmers
access to the subsidised fertiliser for the first time. The
GES “e-Wallet” system also promotes the utilisation of
mobile technology to send farmers vouchers that they
can redeem at distribution centres.
Small-scale farmers with less than 3 ha of land are
entitled to a 50% subsidy on two bags of highquality
fertiliser. In 2012, during the first year of the
programme, 1.2 million smallholders were reached. In
2013, 4.5 million farmers redeemed their “e-Wallet”
voucher, with the goal being to reach 20 million farmers
by 2015.
In the initial two years of the programme 750,000
tonnes of fertiliser has been delivered to farmers,
along with 55,000 tonnes of improved seeds. The use
of these inputs has resulted in 15.5 million tonnes of
food being produced, such that FMARD credits the
programme with also providing improved food security
to 30 million persons in farming households.
Additionally, over 800 agro-dealers and 25 fertiliser and
seed suppliers are registered with the programme and
operational. 2012 also saw $192 million of privatesector
financing commitments leveraged, aided by
guarantees from the Central Bank to commercial
banks that allow them to reduce the risk of lending to
the fertiliser and seed companies (under the NIRSAL
initiative).
•¡
Several different financing initiatives
and instruments have been initiated but
implementation and uptake is still in the
very early stages
•¡
NIRSAL is helping, but beyond NIRSAL
there are few financing options for large
commercial agribusinesses.
•¡
SCPZ company designation is at times
slow.
•¡
Companies report that state governments
are sometimes easier to work with than the
national government.
•¡
NIRSAL and FAFIN are not seen as
adequate substitutes for planned shutdown
of the Commercial Agricultural Credit
Scheme when it expires in 2016.
•¡
Concern exists over inconsistent policy
implementation, with lack of long-term
confidence in reforms.
Akinwumi Ayodeji Adesina, Minister of Agriculture and Rural Development of Nigeria, was named Forbes’ African of the Year
for his reforms to the country’s farming sector, including through the GES programme.
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Nigeria
Nigeria
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