3 May 2014

Nigeria: Dismissed as Poverty Trap, Agriculture Is Nigeria's 'New Oil' and Can Curb Conflict - Minister Adesina

Photo: Tami Hultman / AllAfrica
Nigerian Minister of Agriculture Akin Adesina.

interview

Abuja — Dr. Akin Adesina, Minister of Agriculture for the Republic of Nigeria, is an agricultural economist with decades of experience working to make agriculture productive and profitable. His appointment three years ago was hailed as merit driven rather than political, especially by international agriculture and development specialists. But that didn't protect his ambitious reform programme from initial widespread skepticism and critical media scrutiny at home.

AllAfrica's Reed Kramer sat down with Minister Adesina on a Saturday morning in Abuja, Nigeria's capital, when he squeezed time from a packed schedule for a lengthy interview. From his early days in the job, he framed the goal of his wide-ranging initiatives around the idea of "inclusive growth" – which is the theme of the World Economic Forum's annual Africa meeting in Abuja this month. The minister hails agriculture as Nigeria's path to prosperity – in contrast to oil, which left most Nigerians in wretched poverty while social services crumbled and hunger mounted. And at a time when the country's domestic peace seems increasingly fragile, he sees agriculture as a tool to curb conflict.

Last year AllAfrica asked a class of Nigerian school children if they wanted to be farmers, and they said, "No, because we don't want to be poor!" On the other hand, oil has earned $50 billion or more a year and made a Nigerian elite fabulously wealthy. But you've said that agriculture is the new oil. Really?

Agriculture as Nigeria's new oil? Yes! I believe that the future millionaires and billionaires of Nigeria will come out of agriculture. Listen, if the business of food doesn't pay, why are we spending all that money importing food? It pays! You can choose not to ride a car, you can go inside of a train – but you can't choose not to eat. Nobody eats GDP. People eat food.

Don't get me wrong; growth isimportant. We need a lot of economic growth, GDP growth. We've got to make sure that we have inclusive growth that carries millions of people out of poverty, and the way to have that is through an agricultural transformation that reaches the tens of millions of people at the bottom.

Agriculture has the power to create jobs where it matters, in the rural areas. If you have almost 70% of our population living in rural areas, the main source of livelihood for them is agriculture. That is why as a government we took a position that we must make agriculture work. We must make it a money-making enterprise for farmers, for small businesses, because it creates jobs massively at the bottom. Even a 1% increase in productivity of agriculture will give you more than four times reduction in poverty.

RELATED: Akinwumi Adesina Awarded Forbes 'Africa Person of the Year'

What we're doing now is to make sure that we can produce enough food for ourselves; process our foods locally into what's accepted by our consumers and that can compete with imports. Our population, 167 million people, should be eating a lot of what we are producing. That way we create jobs for ourselves, we will revive our rural economies and we create a future of hope and shared prosperity for millions of our youth in this country - and assure our national security.

With an agenda that large, where do you start?

We started the GES – Growth Enhancement Strategy – as a way of ending forty years of corruption in the seed and fertilizer sector. The GES program is run in every single local government across the entire country. Since last year, eight million farmers collected seeds and fertilizers by the GES system, and that has allowed us to improve the food security of 40 million persons within farm households.

Phones for farmers

We reach our farmers directly by mobile phones to give allocations for seed and fertilizer subsidies. Last year [when the distribution of low-cost mobile phones to farmers began], people are asking me a lot of hot questions. "Are mobile phones what farmers need in Nigeria?" They said mobile phones would not do anything.

Well, they were wrong. In the modern age, the most powerful tool in the hand of a farmer is not a tractor - it is the mobile phone, because that phone allows farmers to check market-price information; it allows them to know about weather information; it allows them to get extension service; it allows them to get access to finance; it allows them to get access to micro-insurance; it allows them to get access to their farm inputs, as we have shown by the electronic wallets in Nigeria - an electronic wallet system that delivers vouchers for subsidized inputs to farmers. We know how much they are they getting, how much are they paying and how much our government is paying. With this ICT technology, we have made it into a transparent system. We have empowered farmers. We have cut out the corrupt middlemen from the system.

We have also given dignity back to our farmers. They don't beg anybody today to get seeds and fertilizers – and they shouldn't. The mobile phone is everything for the farmers of Nigeria today.

Nigeria is estimated to have 125 million cell phones, reaching 75 percent of the population. But they don't reach everywhere, do they? And where they don't reach may be where they're most needed – by the poorest, most rural farmers.

Despite all the successes we are having with it, one of these infrastructural challenges is the penetration of mobile phones in rural areas. There are a number of our rural areas where you don't have good mobile phone penetration- but also you don't even have stability of a connection enough for you to make a transaction. So we started looking for new technologies, trying to innovate - asking how we can get around this problem.

ICT innovation beyond the network

We spoke to the UK government, and they got a company out of UK [Consult Hyperion] which had helped Kenya with its M-Pesa [electronic wallet] system. That company developed for us what is called a near field communication system [which enables phones in close proximity to have radio communication with each other].

SEE: GES Tap Targets 500,000 Farmers in FCT, Sokoto State

This allows our farmers to redeem their inputs in areas where there are no networks, simply by using Android phones as smart cards. So a farmer will get a smart card (when registering for subsidies); they will go to the input retailer that has an Android phone; the smart card has all the allocations for the farmer. They tap it, it's got TAP technology - just tap it on the phone and all the allocation shows up and the farmers redeem their seeds and fertilizer without any network. It's revolutionary. We are the first in the world to do it.

We are rolling it out this year. We are testing it now in parts of the country.

We have also upgraded our system to manage identity of farmers. We have registered 10.5 million farmers. We have moved their biometric information to a national identity management system platform.

So our farmers now will get not only a national identity card; they will also get a farmer card that has all their information on it. What that means is that we will be able to manage identity better. We will be able to reduce a chance that somebody will want to commit fraud in the system, because it's going to be national. And it's also going to help us with financial inclusion for farmers. Farmers that were not known by banks before, all of a sudden, they have all their identity information.

Another thing we are doing is for the input retailers, the agro-dealers in rural areas, where farmers will be able to save to buy inputs - because after harvest is when they have money, but that's when they also spend all the money. So we are developing a point-of-sale system where the farmers get a card just like your credit card. They would save onto a mobile account. They can go to an input retailer later in the season and buy fertilizers and seed, based on the money they have saved.

So we are dealing with three issues: one, making it easier for farmers to save and buy inputs commercially; developing a modern system that allows them to access government subsidized inputs directly by our phones, which is working at scale, and the third is to have a system of identity management so that our farmers can have financial inclusion.

So you can see we continue to innovate. We have to continue to push the envelope, and we will.

One of your early frustrations was an inability to persuade banks to finance farmers – a huge impediment to your plans, you said. Has that really changed, even if farmers now have more identity documents?

Three years ago I had a hard time getting any banker to want to touch agriculture. They were all falling away from you because they didn't see that as a viable sector. When we started, close to zero percent of bank lending in this country went to the agriculture sector – to be precise 0.7%. That was it – to a sector that accounted for 44% of the GDP and 70% of all employment!

You couldn't blame the banks, because agriculture was run largely as a development activity rather than a business. Any sensible banker will not put money into it because banks are not charitable; banks are businesses. So if the business proposition is not viable, they won't put money there.

Well in three years the share of total bank lending going to agriculture went up from 0.7% to 5%. This year we expect it will grow it to 7.5% and next year to 10%. In 2012 when I asked the banks to start lending to agro dealers in the country, they were very reluctant, but they managed to lend $25 million to them. Last year the banks lent to the same agro dealers and seed companies $125 million. This year they are going to lend to them $250 million.

The question is: how much money are they losing? What has happened to default rate? Myself and the Central Bank Governor called bank CEOs together, and we asked them: "How much money have you lost from lending to these agro dealers and seed companies?" Unanimously, they said zero percent!

And so you see that not only is agriculture viable, agriculture today - according to the bankers - has the lowest non-performing loans in the country, because we are rapidly fixing the sector, modernizing the sector. The farmers are paying back their loans, the agribusinesses are paying back their loans, the seed companies are paying back their loans and agro dealers are paying back their loans. I think that's what you get when you move a sector from disorder into order.

Private businesses come on board

What is very exciting for me is the response of the private sector. Take the seed agribusiness sector for example. When we started, almost three years ago, we had about five seed companies in the country. Today we have 80 seed companies. Three years ago, the volume of seed - improved seed - that was produced and commercialized for use by farmers in the country was only 5,000 metric tons. By last year that went up 10 times - to 50,000 metric tons of seed. This year we expect to reach 78,000 metric tons of seed. The reason is that seed companies now can sell their seed directly to farmers instead of selling to government.

If you look in terms of the number of agro-dealers, these are the small mom-and-pop shops that would sell seed and fertilizers in a lot of areas. When we started about three years ago that was maybe 500-600 in the whole country. Today, this is close to 3,000.

Look at fertilizer industry. Before, the fertilizer companies simply sold fertilizers to a government warehouse. There was no incentive for them to invest; government ran everything. So you just sell to government – including selling half sand and half fertilizer to government. Today all that has changed. As of last year we were able to get the private sector to invest US $5 billion into fertilizer manufacturing in Nigeria.

That comes from three companies. Dangote is putting in $2.5 billion into fertilizer manufacturing. Indorama is putting in well over $1.3 billion. Notore, the largest urea plant in the country, is putting, I think, US $1.3 billion into fertilizer manufacturing. So all of a sudden you see that the input sector has changed because of the incentives that we've been able to provide.

So three years on, still facing enormous challenges, what's the result so far?

When we started the agricultural transformation agenda three years ago, the president promised the country that we will improve - we'll add to our domestic food supply a total of 20 million metric tons of food by 2015. So we had a four-year period to do that.

To be able to do that, as I have explained, we could make sure that our farmers would get their seed and fertilizer inputs directly and cut the corruption out of the system. In two years, the farmers in Nigeria produced an additional of 15.5 million metric tons of food - compared to the 20 million tons we wanted to add over a four-year period. So it just tells you that, once you can get the inputs, the right inputs - the right quality and on time to farmers, they can do wonders!

As I mentioned, we reached eight million farmers by last year, and that allowed us to improve food security for 40 million people in farm households because of the increased productivity.

Slashing hunger in half

In addition to that, look at what has happened to Nigeria in meeting the MDG Goal 1 on hunger. We met that goal two years ahead of schedule. [The first Millennium Development Goal is to cut extreme poverty and hunger in half by 2015.]

In June, Nigeria was given an award by the FAO, the Food and Agriculture Organization of United Nations, of having reduced by half the number, the proportion of the population that suffer from hunger. We cut it from 19.3% of the population in 1990-1991 to 8.3% by last year. So you can see that the impact is massive.

In terms of incomes, farmers today are making a lot more money than they have ever made, because they are producing more. If you look at rice alone, just our rice, we were able to get our farmers to produce 1.4 million metric tons of additional paddy rice in 2012-2013.

See: Rice Considered 'Gold' in Nigeria

By 2013-2014, which is the 2013 wet season and the 2013-2014 dry season, farmers produced an additional 2.94 million metric tons of rice paddy. That puts us close to the range of being self-sufficient in paddy production for the country in less than three years!

Yes, we import rice; people have been used to importing rice. Now we are replacing that with local rice that are being rapidly milled by our own milling industry. If you look at total value of the income that went to our rice farmers over the last two years, the net income for the entire rice value chain was 170 billion naira. That is well over a billion US dollars in farmers' pockets because of the transformation agenda.

And I believe that in the next few years there is no reason why Nigeria would not be a net exporter of rice. As I am speaking to you now, our biggest investor, the richest person in Africa is Aliko Dangote. He has just said he is going to put in $300 million in commercial rice production and milling in Nigeria.

It used to be that in this country in the north in the dry season, you will see a massive migration of young people out of rural areas into urban areas in the south to work as laborers and as night guards. No more.

The reason is that we started - the president launched - two years ago the first national policy to produce food massively in the dry season. Not only are we producing food in the main season, we are producing food now in the dry season. So all the young people that used to go down to the south, they are all back on the farm, cultivating in the main season - the wet season - and cultivating in the dry season. That has reduced rural-urban migration.

Our goal is to make sure that all the states in this country take agriculture back as their central economic activity. Take, for example, the Growth Enhancement Scheme of the Federal Government. Today, every state government in the country participates in it, every single one of them. Every single local government participates. State governments contribute 25% of the cost of the program. And the economic benefit is across all the states.

It used to be that we had a very powerful center in the ministry of agriculture that did whatever it wanted. No longer. I decentralized this ministry.

Last year, we established for the first time ever as a country, a federal extension service in the ministry. We now have 37 fully staffed offices: that is one in every state, 36, plus the Federal Capital Territory [Abuja and its surroundings]. The directors, the line staff, work with the state government on programs, whether on seed, fertilizers, land management, fisheries, livestock, grazing management, warehouse/silo management. Every state government will have their own state agriculture extension services, and the federal and the state are working closer together.

So it's a great success, but it would not have happened without the state governments. The fact that it's a partnership with them is very important.

Three of those 36 states you mention are under a state of emergency declared by the federal government. How does that affect your operations? [This interview took place shortly before over 200 schoolgirls were abducted in Borno state, one of the three.]

The situation in the north, especially in the northeast of the country has been challenging, in particular in the states of Borno, Yobe, and Adamawa.

Obviously, you will make more progress in those areas if they didn't have insecurity. We have had situations where farmers have been displaced from their and cases where laborers don't want to move in those areas because they are scared about the insecurity. And you will not have private investment in those areas, because it's not stable.

So yes, there are real challenges with those areas. But it has not affected our work in the massive area all across the north. Take, for example, the case of rice production. When we started the dry season rice production two years ago, we focused on ten states in the north of the country, and it was a huge success. It was the farmers in those ten states who produced the 1.4 million metric tons of additional rice paddy I mentioned.

Last year the number of states participating in dry season framing went up from 10 states to 22 states. That covered literally all of the north of Nigeria including Yobe, including Adamawa and including southern Borno, where there is insecurity. So even in those areas, farmers are recognizing new opportunities that they can get from better technologies.

Wheat for Peace

I believe that one new technology will change the face of northern Nigeria forever - and that technology is wheat.

Naturally, you will not think that Nigeria can produce wheat. Many people say that. But it's the same thing many people said about telephones, because they were thinking landlines. Nobody thought so many Nigerians could have telephones, but now they do.

In the 1980s when Nigeria tried to produce wheat, circumstances that were not viable. They tried to introduce a temperate crop into a tropical environment, and the yield was less than 1 tons per hectare. You have no business producing wheat under that condition.

Today, because of a partnership with the International Maize and Wheat Improvement Centre and the International Centre for Agricultural Research in the Dry Areas, [two of 15 non-profit organizations linked to the Consultative Group on International Agricultural Research, we have succeeded in introducing tropical wheat.

We are growing those varieties here in Nigeria. The most popular one is called Norman Borlaug named after the American Nobel prize winner, the late Dr. Norman Borlaug. This variety gives us an average yield of 6 tons per hectare in farmers' fields - competitive with anywhere in the world, and the grade quality is fantastic. We plan to do 75,000 hectares this year, 150,000 hectares next year, and by 2016 we plan to do 300,000 hectares.

The opportunity to grow that wheat commercially will create massive employment opportunities for youth all across the northeast of this country. So, I really firmly believe that, yes, we can try to deal with the security issues with a military strategy - we need to keep that up - but the economic benefits that will come from this revolution in agriculture on the ground is immense.

We are also going to be setting up animal slaughter centers in the north, where we'll have a cold chain that will move beef instead of moving animals [as roaming pastoralists have done traditionally]. That will reduce the migration of movement of animals into the south, where it creates a lot of aggravated conflicts.

That's been a worrying problem, hasn't it – clashes between farmers and herders?

The challenge we face with the pastoralists and farmers is a consequence of several factors. First is a consequence of urbanization. The demand for land is rising, and therefore there are a lot of incursions into areas that would normally be reserved for grazing areas.

Second, as farm cultivation is expanding, not enough land is available per capita to deal with pastoralists' needs for grazing lands.

The third one is climate change. Areas that used to have a lot of grazing reserves with good pasture are no longer there. So there is biological pressure coming from rising population density, lack of enough grazing land, and also our neighbors; Niger, Mali, Chad, many of them facing similar challenges. Their livestock herds are migrating further towards Nigeria. So it's not just Nigeria, it's because we also have it from other parts of the region.

Taking land conflict seriously

What that means is conflict. We must do something very quickly because the conflicts are getting more violent. Traditional Fulanis [animal herders] that you used to have moving animals - yes, they had conflicts over grazing land. But today you have people that are doing cattle rustling, carrying guns - big guns - which means that we must do something very seriously, and we are.

The government, the president, set up a committee which is chaired by Mr. Vice President to look at the issue of grazing land and grazing reserves in the country. I chair the technical committee. Our plan is to come up with a strategy to reduce the pressure on grazing lands.

Part of the strategy is as follows: First, we will provide more grazing land. However, the key is we are going to change from moving animals to having cattle ranches concentrated pastoral zones where people can actually fatten their animals. We will also have areas where we will have watering points. So basically, as I was saying, we need to stop moving animals and start moving beef.

Today, I believe that we are on the cusp of being confident producers of our own food. It would be the key to sustaining peace for the north of the country.

Nigeria is the world's largest cassava producer, yet you import many products that can be derived from cassava. Last year you had some initial success substituting cassava flour for some of the wheat flour in bread to reduce wheat imports. How's the cassava project going?

See: Banking on Knotty Cassava Tubers

We have made significant gains with regard to cassava bread. We started by saying we will replace some of the wheat flour in bread and confectioneries. That is nothing political; it's just pure economics and security. It's not sustainable for us as a country to be spending $5 billion a year importing wheat.

Today, we have commercialized bread made out of 20 percent cassava flour and 80 percent wheat flour. The bread is better than 100% wheat flour: it has better shelf life; it is tastier; and it's healthier. And we have today over 24 big bakeries in the country selling that on a regular basis.

We believe that we can do it industry-wide. We have started a massive program through our Bank of Agriculture and Bank of Industry. We give them money to upgrade the small scale millers that are milling cassava flour. We are going to put forward a bill that will make it mandatory to include up to 20% of our own local products in bread and confectioneries -5% this year; next year it would be up to 10%; and maybe 20% in three, four years.

The Bank of Agriculture in Nigeria is going to provide financing for the cultivation of 29,500 hectares of cassava this year, which will allow us to produce more cassava and therefore lower the cost of cassava flour to the millers. We have started engagement with our flour millers to recognize that it's really about Nigeria, and that they have to be part of the process.

Other things we have done with cassava - we are working with Cargill, the world's number one food producing company. They are investing $100 million in a commercial cassava starch plant in Kogi State in Nigeria. They are also going to put up a plant to produce cassava sweetener to replace some of the sugar we are importing. Also, cassava can be used for producing ethanol. So you can see that we're creating value for cassava, and turning what used to be labeled as a poor man's crop into a golden crop.

You've taken on a lot of challenges. How do you see the future?

I thank God for the opportunity that a President gave me. And it's not just me. I have got a lot of talented people working very, very hard with me. We are like food soldiers of transformation together. I think people often forget that a minister can only succeed to the extent to which others are working with him to carry out a mandate that a president has given for the country, and that's what is happening.

We get comments all the time - farmers would say, 'We want this momentum and reform to continue'. I feel humbled because it means that it's working, because you will not want to sustain what is not working.

But I give a lot of thought to that. An individual can catalyze change, but it takes an institution to sustain the change. So we're beginning to build strong institutions. We're even talking of a modification in the name of the Ministry of Agriculture and Rural Development to reflect the new mandate on agriculture as a business. Why not Ministry of Agribusiness and Rural Development, so that going forward everybody understands that the role of the ministry is not just to help produce food; it's to improve the processing, storage, and delivery of high quality, safe food for the population.

In terms of legislation, I am excited that our parliament, our national assembly, is committed to sustaining the reforms. They have said that they will make the growth enhancement scheme that delivers fertilizers and seed vouchers to millions of our farmers by mobile phones - they would make it a law that no minister after me can change. It didn't come from the executive; it came straight from the legislature! They are also committed to ensuring that Nigeria spends a greater share of its budget on agriculture going forward.

The private sector are speaking up for reform, because they see that a system where a government has opened up opportunities for the private sector is one that can create shared growth and prosperity. And the political class recognized that the way in which you will stem insecurity in the rural areas of Nigeria is for agriculture as a business to continue to grow.

I think, finally, the best way to sustain reforms, is when the beneficiaries of the reform speak for their reforms. Today in Nigeria, the farmers are solidly behind the reforms because they see that the reforms put them at the center, and they are benefited.

Everybody now is realizing that agriculture is a game changer. So, yes, agriculture IS Nigeria's new oil.

See: Banking on Knotty Cassava Tubers

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