Last month, the Federal Government hosted an open day to conclude the first phase of the Economic Recovery and Growth Plan (ERGP) focus labs which were organised to accelerate investments in three key sectors of the economy: Agriculture and Transportation; Manufacturing and Processing; Gas and Power.
The event, which featured participation from government and the private sector, was organised by the Ministry of Budget and Planning to showcase the outcomes of the sector labs which took place over a six week period between March and May.
Not many Nigerians would be familiar with the concept of policy focus labs. They were created to bring relevant sector stakeholders together with the goal of identifying and unlocking projects that increase private investments in critical sectors of the economy and in the process create new jobs.
The focus labs spurred the development of implementation plans along the identified priority sectors in order to enhance their economic potential. The Agriculture and Transportation work stream focused on increasing private sector investments in crops and agro-businesses while examining the necessary transportation infrastructure to boost the sector. Agriculture is one of the largest sectors of the Nigerian economy, contributing 24% to GDP and employing the largest labour force. However, the country’s share of global agricultural production has remained low over the past 40 years and its contribution to GDP has been on the decline.
The capacity to expand Agriculture from domestic consumption to exports has remained largely unexploited for various reasons including food waste, poor storage, and poor preservation. The Transportation sector’s contribution to GDP has also remained relatively low at only 3.23% in 2016. Over 80% of the sector is based on road transportation, leaving Air, Water, Rail, and others largely untapped.
The importance of the link between Agriculture and Transportation cannot be overemphasized. Nigeria’s agricultural production is currently concentrated in the North Central region, which accounts for 26% of produce while the North West has the largest number of hectares planted.
This means that a large proportion of food is transported from the North across the country, which is reliant on an expensive, inconsistent and insecure road transportation network. This results in over 40% of food produced getting ruined in farming communities and in transit before reaching the markets and consumers. As the Nigerian population increases and desertification reduces cultivatable land, the demand for food will continue to rise. This means that curbing the amount of food lost or wasted becomes increasingly essential. Farmers in Nigeria attribute about 30% of their losses to poor transportation, thus policies focused on fixing the link between Agriculture and Transportation are crucial.
Perishable foods like fruits, vegetables, and tubers, which are Nigerian diet staples are particularly vulnerable to poor road networks and should ideally be transported using rail and other transport links which are faster and can be temperature regulated.
For example, farmers have lamented that tomatoes coming from the North to the South spend over 24 hours on the road, subjected to heat, accidents, break downs and bad roads – all of which contribute to food wastage. This high risk journey comes with an expensive price tag such that a small truck transporting fruits from Benue to Lagos costs about N200,000. This cost has to be passed on to the buyer, which means that food could be significantly cheaper if transportation links were improved.
Developing the link between Agriculture and Transportation also has the potential to catalyse into the other priority sectors of Power and Gas and Manufacturing and Processing. For example, projects in the agricultural processing sector will feed into the manufacturing sector. This means that farmers in various parts of the country are able to easily transport their raw materials to manufacturing and other processing companies.
The projects conceived in the ERGP focus labs aim to bridge this gap. Over the six weeks, the labs resolved the complex inter-agency problems that hindered private sector investments in Agriculture and Transportation. The Private sector will invest $386.84 million into both sectors, which are expected to come on stream in the next 16 to 36 months.
Three key pillars have been identified that will drive investments: the first pillar is focused on Staple Foods along three Entry Point Projects (EPPs)- increasing supply of rice; developing the cassava/yam value chain and meeting the livestock demand with a focus on increasing diary production. There are 23 private sector stakeholders who will work with the Ministry of Agriculture and Water resources to implement the identified projects between 2018 and 2020.
The second pillar is focused on Cash Crops which aims to enhance industrial support services to the agriculture sector in the areas of mechanisation, packaging and logistical support. The projects developed will enhance tomato and palm oil production and processing, while boosting investments in vital crop production.
The final pillar is focused on revitalising transport infrastructure in the Land, Air and Sea and will be implemented in partnership with the Federal Ministry of Transport. Seven private stakeholders have been identified to partner on projects worth $3.25bil, which will create 5,123 direct jobs.
The Out grower Support Scheme was created as a special project due its importance as an economic enabler. This market-driven scheme will benefit medium-size farms across the country through a public-private partnership. Smallholder farmers will benefit from training, access to finance, subsidised inputs, and land clearing schemes. The second phase of the scheme will see yearly land title discussions with State Governments facilitated by Ministry of Agriculture and the ERGP Implementation Unit, as well as coordinated support for improved infrastructure for farmers within their communities.
The Integrated Transport Project was also developed at the labs and will create an industrial zone combined with rail and port links. The total investment required for this special project is $18.06billion derived from the combination of concessional loans, public funding and private investments.
Some notable achievements were recorded during the Labs: the Nigerian Shippers Council received Land Allocation from the Sokoto State Government for establishment of Truck Transit Parks (TTP) which had been previously delayed.
The TTPs are in line with Government’s goals to address the infrastructure deficit by ensuring trucks is not parked on the roads.
Through the Labs, connections between agro-allied companies and processers to raw agricultural suppliers were also facilitated. This was followed up with the development of three-step implementation plans allocated to strategic organisations.
The outcomes of this Lab are key to resolving the challenges of food security, food waste and food self-sufficiency. As the Federal government seeks to reduce the import dependence of key commodities, the projects developed in the labs will ensure that the Agricultural and Transportation sectors and their inter-linkage are vastly improved.
James wrote from Abuja.
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