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India's investment in Nigerian Agriculture Sector

The Times of Africa. Vol. 2. Issue3. July –September 2010. Delhi.

Dr. Suresh Kumar

Nigeria is traditionally an agrarian economy rich with natural resources. The soils and climate favours a wide variety of food crops such as bananas, barley, cassava, cocoa beans, coconuts, coffee, corn, cotton, groundnuts, maize, millet, potatoes, rice, soybeans, sorghum, sugar cane and wheat. Estimates indicate that 82 million hectares out of Nigeria’s total land area is arable. However, only about 34 million are being cultivated presently in the northern states of Nigeria such as Kano, Kaduna, Sokoto, Jigawa, Bauchi and eastern states such as Oyo etc.
Nigeria having a population of 148 million constitutes one of the biggest potential domestic markets in Africa on the one hand and in ECOWAS on the other hand. India firmly believes that Nigeria never accepts the Concept of Aid in terms of quantity and demand quality to be an integral part of economic development. Indian foreign policy believes in self-reliant economic growth in Nigeria that will lead to self-reliant development. The development cooperation should not be based on donor-recipient basis but stand on equal partnership in all sectors including agriculture.
Nigeria needs scientific technology and investors in agriculture sector to make up the difference between the demand and supply. It is up to Nigeria either to adopt another phase of failed experiment of Structural Adjustment Programme sponsored by World Bank and IMF on their terms & conditions or to develop the mutual bond with India to cater to their domestic and regional demand. The Focus Africa Programme of India initially emphasized on seven major trading partners of the region, namely Ethiopia, Nigeria, South Africa, Mauritius, Kenya, Tanzania and Ghana that account for around 69% of India’s total bilateral trade with the sub-Saharan Africa.
The Government of Nigeria had set up various institutions for promoting agricultural production such as Agricultural Development Bank under the Ministry of Agriculture and Rural development. It focuses on the importation of agricultural equipment and machinery from various countries and also financing of the agricultural projects. Major imports of tractors and agricultural equipments came from European countries, which altogether enjoyed 70-80 per cent of the total market. There have been a few large scale-farming ventures in Nigeria, which operated profitably, particularly for the production of groundnuts, fruits, cassava, yam etc.
About 30,000 Indians live in Nigeria and are engaged in trading and manufacturing. India incorporates fair share of Agricultural Machinery and Tractors in Nigeria and exported worth US$.2.8 million (1999-2000), US$. 3.5 million (2000-2001) and demonstrated an increase in the exports by 20%, amounting to US$.4.2 million, which accounted for about 11% of Nigeria’s total market in 2002-2003. Indian agricultural machinery and tractors attributes the quality of the products, price competitiveness, which suits to the local environment involving less operational cost. The bilateral trade between India and Nigeria touches USD 13 billion in 2008 with the balance of trade in favour of Nigeria having an increase of about $5 billion over that of 2007 (Press Trust of India / Lagos May 27, 2009, 15:57 IST).
Public-Private Partnership (PPP) in Nigeria is concerned about the relative decline of agricultural production of domestic food and industrial requirements. Indian investors are buying land in Africa for agricultural purposes. The sharing of the total produce should be in the ratio of 70:30, where 70 percent should be reserved for the export & industry and only 30 percent should be used for domestic consumption. This ratio may vary from 70:30, 75:25, 85:15 and so on depending on particular country’s land fertility and the requirements of the total population of the country concerned. Nigeria may choose this PPP that will help Nigerians working with Indian expertise in soil testing, determining the crop, start model farming with supply of machinery produced in India and also provide know-how about the machinery. The PPP may turn Nigeria from an importer of food grains to a country that is not only to able to effectively feed its population but also export its agricultural products in the region as well as to other countries of the world. Along with it, Nigeria government should adopt a method of assessing the quantity of food production required for local market versus production for exports. Along with it, similar method should be used for local agro-industrial activities. These measures will help to develop mutual understanding among PPP.
The Government has initiated various schemes and incentives for promoting importation of technology and machinery/equipment for development of the agriculture sector such as:
1. “2.5 per cent tariff reduction on importation of agricultural inputs particularly chemicals, agric machinery and spare parts.
2. 7 years tax relief for pioneer industries engaged in large scale cultivation of food crops.
3. Benefits for locating in Free Trade Zones and EPZ especially for palm, rubber, cocoa, etc.
4. Liberalisation of land acquisition for large scale farming.
5. Agricultural credit guarantee scheme, which guarantees agricultural credit and loans to small and medium farmers.
6. Nigerian Agricultural Insurance Corporation which provides risk cover for crops against natural hazards.
7. Nigerian Agricultural Cooperative and Rural Development Bank to provide soft finances.
8. Creation of liberalized trading environment as incentive for investment on agriculture.
9. Research and development grant of up to 120 per cent of expenses.
10. Local value added 10% tax concession for five years.
11. Commercial banks have been directed to earmark 10% of the profit before tax, for development of agriculture sector, by way of loans and finances at concessional rate of interest”(http://www.eepcindia.org/marketsurvey/n0917.pdf).
A strong and an efficient agricultural sector would enable Nigeria to feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries. ‘The State of Gujba in Nigeria is currently operational a medium sized Fertilizer Blending Plant. Willing investors are invited to assist Government to expand the plant to enable it cope with increased demand for the product. Various agro-based raw materials are available such as Gum Arabic, maize, millet, sorghum, wheat, cotton seed, groundnuts, Guna seeds, Cow Pea, Tamarind, Kaba (desert Palm) and Red Pepper and the prospective investors are invited for joint ventures’ (Investment Opportunities in Yobe State of Nigeria, 2008: 5-10).
The agricultural sector has a multiplier effect on any nation's socio-economic and industrial fabric because of the multifunctional nature of agriculture. Federation of Indian Chambers of Commerce & Industry (FICCI) is organizing ‘Namaskar Africa’ – an Indian business expedition to Africa from 14-16 January 2010 at Lagos Nigeria. About 400 leading Indian companies and business players are expected to participate in an exhibition and business forum. It would strengthen partnership between the two chambers in the automotive, pharmaceutical, healthcare, education, energy, agriculture and agricultural processing sectors.  According to the head of the Indian Chancery in Lagos Raj Kumar, India has pledged to support Nigerian agriculture with machinery and personnel.
Overall, Nigeria should take this opportunity as good potential for the PPP in collaboration with Indian experience and utilize the immense benefits accruable from a well-developed agricultural sector. The investment in agrarian economy links rural development and poverty eradication, which may strengthen Nigerian sustainable development.