Chairman of the Fertilizer Producers and Suppliers Association of Nigeria, Thomas Etu, spoke with journalists on how Nigeria is benefitting from the Presidential Fertilizer Initiative. Jonathan Eze presents the excerpts:
How did the presidential fertiliser initiative start?
Presidential Fertiliser Initiative started with a call from the presidency put through to the President of Fertiliser Producers Association which is my good self. And that call came through the Chief of Staff, Malam Aba Kyari that they want to see me. The President made it clear that he was worried that the price of fertilizer was still at N9,000 per bag. And he mandated us to see how we can design something that would make the prices more affordable and also available for the Nigerian farmers, FEPSAN then designed a programme, a template. That template led to the forming of the Presidential Committee, which is the Presidential Fertilizer Initiative, headed by the Governor of Jigawa State and coordinated by the Chief of Staff to the President, Malam Abba Kyari.
This Committee comprises of the Chief of Staff himself, the Governor of Jigawa, the Group Managing Director of NNPC, the Governor of Central bank of Nigeria, the President of Fertilizer Producers and Suppliers Association of Nigeria, the Managing Director of the Nigerian Sovereign Investment Authority, the Minister of Finance, the Minister of Agriculture, that was how we designed this programme. This programme was designed to engage with the input suppliers of the raw material we needed in the fertilizer blending process.
Basically, 63 per cent of these raw materials are available in Nigeria. These raw materials include; Urea which is Nitrogen, produced in Port Harcourt; and we have the Limestone, which forms the Calcium input in fertilizers that is produced by the West Africa Fertilizer Company in Okpela in Edo State. These form just about 63 per cent of the raw materials needed. For imported raw material, we have 21 per cent Phosphate from Morocco, 16 per cent Potassium from Belarus. This is how we designed what we import. You may not know but we have Potash in Nigeria but it is not available in commercial quantity.
By sourcing 63 per cent of raw materials found in the country for inputs, we have saved the country, $200 million in foreign exchange. What we have done is make sure that we adopt a cost-saving model, as against the previous regime of subsidy. This programme therefore has also saved the Nigerian Government, N60 billion in subsidy. Our programme is so tight that there is no type of subsidy in it, which is why we called it a cost-saving model.
This was how this initiative was born. Because we were importing the main active ingredients from Morocco, President Muhammadu Buhari himself initiated a trip to this country to negotiate with the Morocoan King on how we could get phosphate on a government-to-government basis. This yielded a good deal for the country in pricing. It was left for the committee to negotiate the potash with the government of Belarus. It was therefore the discounts we got from these deals and added to the value we got from sourcing 63 per cent of other raw materials locally that we then transferred to the farmers. And that was how we were able to reduce the price to N5,500 per bag. This is so because we book the Agro dealers at N5,000 and allow them to sell to the end-users at N5,500, leaving them with a margin of just N500 for each bag sold.
How was it easy to come up with the template?
It is funny. I say it is funny because when I got the first phone call from, Malam Kyari, I thought it was one of those calls from people with strange and bogus proposals. I did not know him before then and therefore dropped the call on him when he began to mention what Mr President wanted us to do. I was also a bit rude too, I must confess. But he repeated the call after five minutes and I also hung up on him. But I had to activate my TrueCaller when the calls would not stop and that was when I knew that the person trying to reach me was the Chief of Staff to the President because an hour later, he called again and his name appeared. I then picked the call and apologised to him and we laughed it off because he understood. It was then he fixed an appointment. I am sure they called us because our group, FEPSAN, is the biggest player in that aspect of the Nigerian agriculture industry and I am sure that was why the government thought it could work if they partnered with us.
How were you able to rally the entire industry to buy into the initiative, given that you are supposed to be in competition against one another?
I cannot tell you it was easy. There were a lot of challenges. But I must commend President Buhari for displaying the right political will needed to drive this process. The challenges of bringing competitors together were there, especially given that the margins are not high. But we had to make people understand that we needed to get this done for the benefit of Nigerians. We are Nigerians and we need to create jobs for Nigerians. We have 32 blending plants in Nigeria that were moribund. Out of this, only five blending plants and at 10 per cent capacity because excessive emphases were laid on importation, which also meant, by its very implication, that we were exporting our jobs even when we cannot provide jobs here in Nigeria.
Foreign exchange that is scarce, we are spending it on building other people’s economy. Anybody that is committed to this country will know that unemployment is raging like fire. Some of these factories you see, some of them have been out of operation for 15 to 20 years. So we saw it as an opportunity to help get the country back on track. We were lucky that we have a president that has the interest and political will to make a difference and he was ready to make this initiative to work. And we had no option but to key in to this willingness. It was tough. I practically had to meet each and every one of them one after the other and make them understand that this is not politics but about building our country and each one of us had a role to play.
Today, Nigerians can testify, farmers can testify that it has been a great initiative. I give you an example; the revolution that happened in rice production, the revolution that happened in maize production. Let me even go back to what happened in fertilizer production. What will interest you is that in 2017, because of the Presidential Fertilizer Initiative, Nigerians consumption stood at 1,570,000 metric tonnes of fertilizer. This was the first time in the history of this country from independence. And this happened without the government providing any form of subsidy. I am convinced that within the next two years, the country will be self-sufficient in NPK that we may have to start exporting. Currently, our neighbouring countries are relying on Nigeria for their NPK needs. Cameroon, Chad, Niger, Benin and Togo are currently buying from us.
Within one year, hundreds of thousands of direct and indirect jobs that were created by this Presidential Fertilizer Initiative is over 150,000 jobs.
When you look at food production, in 2016, we had a shortfall of rice and maize production. Our consumption was 7.5 million tonnes a year but we were able to produce only 7 million tonnes, meaning we have to import the shortfall of over 500,000 metric tonnes. But when we look at the numbers for 2017, we produced 9.8 million tonnes of rice and maize which is more than what we need to consume. Nigeria is the food basket of West Africa Look at the rice farms springing up from just about everywhere.
I must commend the Central Bank of Nigeria for keying into the drive of the government by injecting money into the various layers of the value chains in the agricultural sector. I can tell you that by 2020, Nigeria will be self-sufficient in rice production and this is down to the commitment of this government. Today in Nigeria, we are talking about 12 million rice farmers; organised rice farmers. And the maize farmers are organising themselves. We have the cassava farmers; the soya beans farmers, the ginger farmers. This is essentially because farming has become a business and people are beginning to understand that is it a business.
What is critical to the farmers are the inputs. Before now, the farmer buys a bag of 50kg fertilizer at between N9,000 and N13,000. Today, he gets it at N5,500. This means that his production will change upwards, his inputs will increase. Before all the initiatives of this government, farmers were producing just above 2,000 metric tonnes. Today, they are getting 7,000 metric tonnes. This is because of the interventions of this administration. Last year, for the first time in the history of this country, fertilizer was delivered early and affordable, even for dry season farming. This year is the same thing.
What has been the role of the Nigerian Sovereign Investment Authority in the successes recorded so far?
The role of the NSIA is very interesting. The agency came in as a bridge. While the Central Bank provides the funds for this initiative, the NSIA coordinates the relationship between members of FEPSAN and the CBN. What we do is that the NSIA takes the fund from the CBN, import the raw material themselves, sell the raw material to the blending plants and when we blend, we sell the finished fertilizer to them and from there, it gets to the agro dealers who then sell to farmers. This brings in a lot of prudence in managing the resources that has been made available. It is a sort of partnership that reduces the pains and negative aspects of competition and provides a level playing field for all the blending plants. And that is also why it has been possible for the farmers to get fertilizers at such unprecedented affordable prices because although we produce and store, when we sell, we sell to farmers on behalf of NSIA.
Who do you think are the biggest beneficiaries of this scheme?
I would say it is our country Nigeria; the Nigerian farmer. Let us look at this again: the Initiative has created a lot of jobs in the market, moribund fertilizer blending plants have started operations. And when we talk about the gains here, we talk about all the players along the value chain. There are various levels of support it provides for the economy. We have the agro dealers who earn margins from breaking our bulk and selling to farmers; we have the people that make the bags that the fertilizers are stored in; we talk about those who make the threads for sewing these bags; we are talking about transportation. Last year we deployed 33,300 trucks to move products around nationwide and it was so well coordinated we recorded no single incident of diversions or accidents.