NIGERIA Invest in 2012-13 - Newsdesk Media

Despite decades of neglect that
have left it lagging behind the
energy sector, things are about to
change for agriculture. Peter Guest
notes a determination by the
Nigerian government to increase
investment in farming, exploiting
an ideal environment and a wider
market across West Africa
For the past half-decade, Nigeria’s
runaway growth rates have seen
it enter more frequently into
international investors’
discussions. As a major oil
exporter with an expanding, youthful
population of around 170 million, the
country has seen investors flocking to its
financial services, telecoms and hydrocarbon
sectors. However, those are only part of the
country’s economic story.
While Nigeria’s foreign exchange
earnings mainly come from the oil industry, a
large proportion of its domestic economy is
rural. Agriculture has not kept up with the
country’s development or demographic
trends, leaving it heavily reliant on imports.
However, with a new political drive and
renewed private-sector interest, the sector
could be on the verge of a resurgence.
Until the early 1960s, Nigeria was a
net food exporter. However, as the oil
industry began to dominate the domestic
and international agenda, the sector fell
into relative decline. Public- and
private-sector capital for investment dried
up, and infrastructure targeting agricultural
areas was neglected.
Since then, Nigeria has become reliant
on expensive imported grain, and now ships
in more than 3.5 million tonnes per year,
mostly from the US. Volatility in global prices
for food – caused by unusual weather
conditions – have also left the country,
like many others, exposed to the vagaries
of international markets. High and rising
AGRICULTURE AND WATER 147
prices, too, have contributed to inflationary
pressures, reducing the positive impacts of
economic growth in Nigeria.
It has long been accepted that Nigeria
needs to diversify its economy in order to
unlock itself from its current dependency
on international oil markets whose
fluctuations in the past few years of global
uncertainty have caused difficulties across
exporting nations. The combination of this
imperative to find new sources of revenue
and employment, as well as the demographic
necessity – and opportunity – is driving a new
focus on agriculture in the country.
Nigeria’s population is urbanising and
becoming more wealthy. The country’s
economy has been growing uninterrupted for
a decade, driven in large part by the oil
industry, although financial services,
telecoms and technology, and construction
have all begun to develop.
Richer societies
The commercial capital of Lagos is fast
becoming one of the continent’s mega-cities,
growing in size and population. Richer urban
societies consume more, and their diets
typically change to include more protein, in
turn requiring far greater production of
agricultural commodities as feed for livestock.
Jacques Taylor, director of agricultural
banking at Standard Bank, recently relocated
to Nigeria from South Africa in order to
spearhead the bank’s drive into West African
agribusiness. In pure output terms, Nigeria
is already the largest agricultural producer
in sub-Saharan Africa, Taylor notes. While
there are serious gaps in the country’s
infrastructure, and the fragmented nature
of the industry makes the challenges acute,
the decline is not terminal. “It is important to
acknowledge that Nigeria has pockets of
well-structured and viable businesses in the
agricultural sector – where entrepreneurs and
corporates manage to establish and grow their
businesses despite infrastructure challenges
and inefficient value chains,” Taylor says.
INvEsT IN NIGERIA 2012-13