The Central Bank Governor raised concerns over the government’s rice policy.
Nigeria has become the world’s largest importer of tomato paste, the Central Bank Governor, Lamido Sanusi, said last week.
Mr. Sanusi said this development has highlighted the need for an aggressive revival of the nation’s agricultural sector.
The Governor, who said this at an event in Lagos last week Monday, said “agriculture growth slowed in 2012 for first time in a while”.
According to him, the slowdown in the first half of 2012 was due to insecurity; while that of the second half was due to floods.
“90% of paddy rice was affected by floods”, he said, implying a shortage in local rice.
He added that the growth of the sector is due to greater factor intensity and not productivity and that the bulk of agricultural production is at the lower end of value chain.
Challenge of rice policy
The Central Bank Governor also expressed his concern over the 100% levy on rice, meant to discourage imports.
Mr. Sanusi said it doesn’t help that the 100% levy on rice that is intended to discourage imported rice, is imposed at this time of a local shortage, thereby inflating the cost of the food.
According to him, there is a need for inclusive growth or growth that is accompanied by poverty reduction; hence, agriculture and poverty-reduction should be the main focus.
Efforts are however being geared to aid the agric sector, more especially, productivity.
A farm 400km outside of Kano will start producing 1,000 metric tonnes of tomato paste soon, but this is one-third of the amount imported, Mr. Sanusi said. He also added that there would be other import-substitution initiatives in rice and cassava sectors to reduce imports.
Commercial farming in Nigeria has suffered frustration on account of poor access to credit and interest rates as high as 25-30 per cent; as well as stiff competition from imported products.
Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry, the umbrella body for varying industries, said the intervention fund for agriculture has since been exhausted.
According to him, there is poor capitalisation of the Bank for Agriculture; and agricultural insurance is virtually non-existent.
Investors had difficulty in getting claims from the Nigerian Agricultural Insurance Company in 2012 and access claims was fraught with heavy bureaucracy and corruption, the LCCI boss said.
“Funding remains a major issue. Investors had to source commercial loans to invest in agriculture. Even access to credit at these rates was difficult.
“Many farmers have no title to their land. This made collateral provision for credit very difficult,” he said.
He said there is the need to make long term fund available to farmers at single digit interest rate as well as a capitalisation of the Bank of Agriculture.
“The bank should be given the kind of attention similar to that of the Bank of Industry” he said.
Aside from funding, other challenges also bedevil the sector such as lack of modern equipment storage facilities, and experts to enlighten the farmers on how best to plant for best yields.
“Infrastructural facilities are poor, making processing and transportation costs very high,” Mr. Yusuf said.