The panel discussants at the Stanbic IBTC 2016 Business Leadership Series in Lagos...recently

Understanding and tapping from the potential in the agricultural sector, which is viewed as the game-changer for the economy, was rekindled at the Stanbic IBTC Business Leadership seminar held in Lagos recently, reports Peter Uzoho

The economic recession going on in the country is really having adverse effects on the nation. The national economy is shrinking by the day and government both at federal and state levels are sweating out their mental and physical energies, trying to get a quick fix to the problem. Paying workers their monthly salaries and executing capital projects have become a tall order. The naira has maintained a continuous decline against the dollar and other major foreign currencies, and this has led to persistent rise in prices of goods and services in the country, both local and foreign made, forcing the citizens to buy in pains and sorrow.

Crude oil, the mainstay of the country’s economy has lost its monetary value in the international market. An option-take discount and buy has even been adopted to increase the supply of the product, in order to increase revenue generation. The country’s Gross Domestic Product (GDP) has not been anything to write home about in recent times.

In Nigeria, hunger and starvation have become the birth right of the ordinary citizens. There is no money to cook and no food to eat. Death rate is increasing by the day as many citizens barely have money for their healthcare. Parents and guardians are withdrawing their children and wards from schools due to inability to foot the educational bills.

Jobs are being lost on a daily basis, which adds to the already existing unemployment rate in the country, resulting to increase in vices such as kidnapping, armed robbery, thuggery, restiveness and prostitution by the youth.

However, amidst these challenges, different suggestions on the way out have been proffered and will continue to be proffered until the battle is over. Government both at federal and state levels have been churning out remedial measures. Corporate organisations, civil society organisations, technocrats, professional and religious bodies, have in their different fora come up with their own solutions.

Among the suggestions rendered was the urgent need to diversify the country’s economy so that other sectors would be given the needed attention. Like a consensus, many Nigerians, both individual and corporates suggested and supported the reviving of the agricultural sector which used to be the chief source of the economy before the crude oil boom.

At the Business Leadership Seminar organised by the Stanbic IBTC Holdings, recently in Lagos, entitled ‘Gems in the Field’ young and old farmers were brought together and mentored by experts on new trends in agribusiness, and the abundant opportunities in the sector which they could tap from.

Presenting the welcome speech, Chief Executive Officer, Stanbic IBTC Holdings Plc, Mrs. Sola David-Borha, described agriculture as the game-changer for the country. “We are facing a recession, negative growth, and agriculture is the sector in queue to do the process 4.5 per cent. And we all know the story about the enabling effect of agriculture on our economy; the fact that it creates millions of jobs across the entire value chain; it can drive exports, and the much needed foreign exchange.

“So for me I think the real challenge for us is actually unlocking the opportunities in agriculture. The execution of it- making everything that we all talk about a reality so that agriculture is really firing on all cylinders.

“And for us in Stanbic IBTC, we consider agriculture to be a key sector, and we play across the entire value chain by financing, advisory, machinery. Agriculture is not for the faint-hearted. I’m sure we agree with that. I used to think that agriculture was one of the potential sources of deposit for the banks until I was corrected that agriculture is not about deposit, but it’s about providing the right type of financing across the value chain, and other things come along with it… It does require patient capital. It does require dedication and commitment to see it through, but the rewards are huge.

She further said, “The reality is that agriculture in Nigeria today is high risk. But, what the bank and the Central Bank together with the state governments have been able to do is come together and under the Nigerian incentive risk-based sharing model, share the risks associated with agriculture so that hundred per cent of the risk is not on one party like the banks. When you share the risks it is easier for banks to then lend to agriculture. And since this model has been put in place the amount of bank lending to the agricultural sector has increased and continues to increase. So the key is sharing the risk. In the past, banks were expected to bear hundred per cent of the risks, but that is not the case, and that has enabled banks to be able to provide more support to the agricultural sector.”

Contributing, Managing Director, Babban Gona, Mr. Kola Masha, in his optimism, said that Nigeria would be the next Brazil in agriculture, stressing that only four things made Brazil popular as one of the major producers of agricultural products in the world.
“We believe this because what made Brazil to be Brazil is really four key things – they have tremendous mass land, they have tremendous access to water, they have access to labour, and they really have very large internal markets that enabled them to build up their economy and skills internally to dominate global exports.

“So if you look at Nigeria, land: 85 million hectares of arable land, water: 220 billion cubic metres of underground water reserve; we have three of the eight major river systems in Africa, and from south to north, we get minimum of 800 to 1200 millimetres of rain per year- plenty to grow almost anything. When we look at labour, we have 19 million people today, between the ages of 15 and 45 that are contributing. And the most important is internal market: 180 million people, five new people per annum, and by 2030, nine million people among the middle class will have tremendous opportunities.

“What are the key trends we’re going to see in Nigeria? What we’re going to see in land over the next 15 years is that the reality is that with farming and land policies, there is this constant debate whether you want to be a big farmer or you want to be a small farmer, which one is better, and so on. And the reality is that there is argument on both sides. But the reality is that whether you are a large farmer or a small farmer, you can be a highly competitive productive farmer. Take for instance, Thailand today exports 35 billion dollars in agricultural produce, average farm size is three and half hectares, small farmers, but highly competitive, highly productive, and able to compete at the global stage.

“Now in Nigeria what we’re going to see is a trend in shrinking average farm sizes. In 1961, Nigeria had 2.1 hectares for rural inhabitants. Today, that number has dropped down to 0.9. By 2030, that’s going to drop to 0.6 to 0.5 hectares per inhabitant. This is because population is growing; land is actually not a finite resource, and actually reduces over time due to erosion, desertification, and organisation. So the reality is that unlike traditional ideas that people have about Western model of farming, that it’s a vast big farm, Nigeria is going to follow a more Eastern approach.

“Vietnam where you have small farmers and small plots of land but highly productive like their friends in Thailand. For market, what is going to be the key market that will drive the agricultural sector in the next 15 years? It’s going to come down to feeding one group of people and that’s the imagined middle class. As the imagined middle class increase their disposable income, their diets are going to change, and as those diets change, that is going to be the key engine for growth in the agricultural sector.

“The value chain that we’re going to see dominate the agricultural value chain over the next 15 years are the meat value-chain, poultry agriculture and social feeds value-chain, refined grains, rice, and then potato, starch, cassava, sugar from both cassava as well as traditional source of sugar-sugar refineries. And then, edible oil to fry that chicken, fish and plantain. Now the opportunities in these value-chains are quite enormous. Water, Nigeria today has a lot of untapped reserve in water- 220 billion cubic metres of underground water reserves. We haven’t even started to tap into our opportunity for irrigation in this country.”

Masha noted that in striving to drive the agricultural sector, security was going to be a major problem. “The Niger Delta crisis in the South, Jos crisis in the Middle belt or Boko Haram in the North-east. We have a dramatic rise of insecurity and this is driven by the fact that 20 million youths entered our workforce in the last 20 years; entering a highly over-saturated workforce, causing risks. And the reality is that today we have a median age of 18. With a median age of 18, in the next 20 years, 80 million youths are entering Nigerian workforce, which is the population of Germany; that’s the number of jobs we have to create in the next 20 years, because it’s four times the number that entered the workforce in last 20 years. “

According to him, the solution to the problem was agriculture. “It is massive-22 per cent of GDP, tremendous potential, labour intensive and it requires relatively negative skills.” He also said that one of the factors that make farmers succeed in their farm business is farm cooperatives.

Lending his voice, Founder and CEO, AgriProtein, Mr. Jason Drew, said the industrial revolution was over while the sustainability revolution had begun, noting that having managed the transition, “we define the outcome for the 21stcentury, and in fact, for all of humanity. The problem is the future is not what it used to be. The future has always been rough and stressful in the past, but entering this revolution everything is changing completely from the mechanics. More businesses, more agriculture will be raked up with more model as we’re starting again. In the new world, the pillars of the future are around five things: sharability, preparability, durability, upgradability and closeability”.
He stated that fish farming was the most rapidly growing business in agriculture globally with a growth rate of 15 to 17 per cent per year.

Drew whose company specialises in breeding flies to produce maggots, which he then sells as livestock feeds, noted that AgriProtein would fundamentally change the protein food cycle in developing and developed world. Pointing out more economic importance of larvae, which is the source of his company’s product, he said, “Larvae have over the years developed world’s most up-to-date antibiotics. Flies are used to breakdown wastes-it is used to disinfect wastes. It is used during war to treat wounds of soldiers that refuse to heal by medicine.”

Explaining the role of Stanbic IBTC in the value chain of agriculture, Head of Agric Banking of Stanbic IBTC Plc, Mr. Jerry Gushop said, “We in Stanbic IBTC see the importance of the entire value chain. The entire value chain has a lot of opportunities and options. So somebody can come in for input supply financing alone. Another person can also come for marketing financing. Another can come in for finance for his trading; someone may also come for equipment, while others can come in to seek for warehousing facility. And so because of that we looked at the entire value chain from production up to capacity and that is the essence of what we are doing at Stanbic IBTC. We don’t want to restrict our support to one area.”