Rahul Savara, Group Managing Director, TGI Group

Interview: Rahul Savara

What are some possible solutions to the challenges facing the sector today ?

RAHUL SAVARA: There is no doubt that data is a key enabler in every sector of the economy, and even more so in the agriculture sector. Information on market prices, good agricultural practices, weather and soil conditions, and fertiliser requirements are fundamental to running a sustainable and profitable operation in the sector. For the small farmer, data on sales prices is particularly important.

Although produce is purchased from farmers based on quality, there is always a set price for produce in the local market, which is benchmarked against the ruling price set by the region’s major markets. Most farmers, however, receive the price information only when they come to sell their goods.

The Federal Ministry of Agriculture and Rural Development is working with stakeholders in the sector in order to support data gathering for the agro-industrial supply chain. However, in order to enable widespread access to this information for small-scale farmers, there should be equal effort and focus on breaking down complex data and packaging it in simple bite sized pieces that can then delivered to the farmer in question. Mobile-based services, coupled with the proliferation of mobile phones, will play a significant role in Nigeria’s economy.

How effective has the Agricultural Transformation Plan (ATP) been in improving access to finance?

SAVARA: The ATP has brought about changes that have created and improved access to finance for players within the sector. Under the current administration, efforts to rebuild the agriculture sector have intensified. Through the Central Bank of Nigeria (CBN), schemes such as the Anchor Borrower Programme have allowed local rice farmers increased access to credit at a single-digit interest rate. This has had the effect of creating economic linkages between hundreds of thousands of smallholder farmers and reputable large-scale processors, with a view to increase output, while simultaneously improving the capacity utilisation at integrated mills. Other such interventions have been conducted for food crops such as cassava and maize. To engender further improvement, commercial banks should be encouraged to lend out a certain portion of their credit portfolio to a priority sector such as agriculture through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending. This means that for the banks to reduce the risk of non-recovery, more sector-specific due diligence has to be carried out.

What have been the results of government efforts to encourage local agricultural production?

SAVARA: The import substitution component of this administration’s backward integration policy is highly commendable. From the 41 items made in eligible for foreign exchange by the CBN, to the various intervention schemes targeted at farmers to improve yield, as well as private sector players being incentivised to invest significantly in agro-processing, the impact can be said to be remarkable. These changes, coupled with the awareness created about the benefits of buying goods made in Nigeria, especially for a commodity such as rice, are playing a significant role.

For example, local paddy production has increased from 5m tonnes to 7.5m tonnes in the last two years, and local cassava production has also grown from 35m tonnes two years back to 45m tonnes currently.

The private sector is a key driver in this, as the enabling environment being created favours investment in new firms. There is a restored confidence in businesses due to the government’s efforts to improve local production and its encouragement of import substitution. Ultimately, job creation, the preservation of foreign reserves and the development of the rural economy are but a few of the attendant benefits.