WEF_GrowAfrica_AnnualReport2014

2013 in Review 2013 in Review
CONSTRAINTS
Companies struggle with infrastructure,
finance and security of supply
THE LONG VIEW
Agriculture is strengthening Nigeria’s economy,
but equitable impact remains a goal
Companies highlighted the following constraints facing their investments. If addressed, they could strengthen the
enabling environment and unlock further investment.
1. Infrastructure limitations: were consistently cited as the greatest barrier to investment, regardless of investor type,
size, location or stage of value chain. Feeder roads, energy, storage and processing facilities nearer to farming
communities and telecommunications networks in rural areas – all are challenges that impede the expansion of the
Nigerian agricultural sector. In part, it was recognition of the need to address these impediments that led FMARD
to develop the SCPZ initiative.
2. Availability of finance: agriculture, especially primary production, continues to be perceived as highly risky
in Nigeria, making access to finance difficult. While funding remains the second greatest challenge cited by
companies, initiatives like FAFIN and NIRSAL are starting to address this challenge by “de-risking” agricultural
lending and investment.
3. Difficulty of securing supplies: with investors heeding the government’s call to establish processing facilities,
primary production must keep pace through improved yields and value-chain linkages and a reduction in
postharvest losses and side-selling in order to increase security of supply.
4. Non-optimal policy and regulatory environment: while the ATA has brought a number of new policy and regulatory
changes to the sector, commercial actors believe that further effort is needed to improve competitiveness. Planned
government initiatives to raise tariffs on food imports, mandate the inclusion of locally-produced inputs (such
as cassava flour), and encourage local staple crop consumption are steps in the right direction. Similarly, while
initiatives such as the GES e-Wallet scheme have started to address governance challenges and corruption issues
more explicitly, there are still a number of other areas in the overall business environment where weaknesses
in governance create leakage in the sector and impede the pace at which agricultural transformation can be
achieved.
5. Shortage of skilled human capital: skill levels need improving all across the agricultural value chain. Expanded
farm-level extension work, agro-dealer training and youth-focused agro-entrepreneur development are all required
to ensure more knowledgeable actors operate in Nigeria’s food industry. Growing large domestic and international
investment in the sector does however bring with it the promise of useful and much-needed technology transfer.
Agriculture makes up about a third of Nigeria’s
economy, and over the past three years has been a
consistent driver of the overall rise in Nigeria’s GDP,
surpassing the 6% CAADP agricultural growth target.
This growth has helped reduce Nigeria’s import bill
from $11 billion in 2011 to $8 billion in 2012, with
further reductions expected for 2013.
While only 23% of the country’s population is involved in
agriculture, that still equates to about 40 million people,
of which nearly 60% are men. Nigeria currently produces
cassava, yams, maize, sorghum and vegetables in
high quantities, and is the largest producer of cassava
globally. The country also boasts a large livestock
industry (the second-biggest in Africa) and a growing
fish sector. A dominant agricultural producer in the
West African region, Nigeria produces roughly 45% of
all of the food in the 15-member Economic Community
of West African States. Since 2000, Nigeria has
consistently funded agriculture to levels between 3%
and 7% of its annual budget, but has never reached the
10% CAADP public expenditure target.
CAADP TARGETS
24.4% 68.0%
Child malnutrition:
% of children under 5 underweight
(World Development Indicators, 2011)
A highly-diversified economy, Nigeria ranks 147th
globally, and 20th among sub-Saharan African states
in the World Bank’s annual “Doing Business” survey.
However, regionally it ranks 11th in terms of access
to credit, which is indicative of the country’s large and
sophisticated financial sector. Nigeria is a uniquely
attractive market for digital agribusiness services, with
126.3 million mobile GSM connections, 14% of which
are 3G data connections.
In 2013, Nigeria was recognised by FAO for cutting
absolute hunger in half three years ahead of the
2015 Millennium Development Goal target. However,
for millions of Nigerians, extreme poverty remains
persistent and malnutrition also continues to be a
significant public health problem. Hence, efforts
continue to be focused on improving nutrition levels
in the country and to stimulate job creation in the
agriculture sector, particularly for youth. The UNDP has
assessed that growth in the country needs to be more
equitable and broad-based, and that social protection
and poverty eradication programmes need to be scaled
Poverty:
% living below $1.25/day
(World Development Indicators, 2010)
Public agriculture expenditure share in total public expenditure 1990 - 2010
Nigeria
CAADP Target
12
10
8
6
4
2
0
Agricultural growth has helped reduce Nigeria’s import bill, from $11 billion in 2011 to $8 billion in 2012.
1990 1992 1994 1996 1998 2000 2002 2004 2006
2008
2010
Source: ReSAKKS 2014 - www.resakss.org
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Nigeria
Nigeria
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