Nigeria eyes private funds to spark agriculture boom

Can investors get rich by backing Nigerian agriculture? An increasingly loud chorus of voices say that answering this question may be the most pressing challenge facing Africa's most populous country, ahead of defeating Boko Haram Islamists or curbing rampant corruption. Nigeria last week jumped ahead of South Africa as the continent's biggest economy after the re-calculated results of national output were announced. But in terms of per capita income, Nigeria's global ranking is still a grim 121, with 84 percent of its 170 million people living on less than $2 per day, according to 2010 World Bank estimates. Experts agree that agriculture offers the best chance to generate millions of new jobs quickly. But, while job creation and improving food security are national priorities, the best way to spark an agriculture boom is to focus on profit, said agriculture minister Akinwumi Adesina. "It is not about bread," he told a conference of business and government leaders last month. "It is about making money." -The bomb has gone off - Armed with degrees from elite US universities, including Harvard Business School, Nigerian Kola Masha returned home in 2007 looking to launch a business with a positive social impact. Youth unemployment was the greatest threat facing Nigeria but few people realised how dire the situation had become, he told AFP. From 2007 to 2010, Nigeria had one of the world's fastest growing economies. However the number of people unemployed also rose by 16 percent each year. Youths were especially hard hit, with 56 percent out of work in 2010, according to official data. The trend was in part a result of the so-called oil curse: Nigeria, Africa's top crude producer, has given excessive attention to the oil industry which generates very few jobs, while ignoring job-creating sectors. "Most people I shared that with said, 'Oh my God, it's a time bomb' and I said 'no my friend, it's a bomb that has already gone off'," Masha said. A long-running sectarian conflict in central Nigeria has killed more than 10,000 people this century, while the gruesome Boko Haram Islamist insurgency in north has claimed thousands more lives since 2009. "If you talk to anybody in the armed forces they will tell you that it is men aged 16-24 that are driving this whole thing," Masha said. "They are angry and hungry." In 2010 he launched Doreo Partners, a firm committed to creating 10 million jobs by 2030 through private investment in small-scale agriculture. - High net worth individuals - Doreo's pilot project in northern Kaduna state provides 1,800 farmers with a "complete end-to-end" assistance package, including training, credit to buy equipment and access to high quality seeds, said Masha.   The firm brokers the sale of produce, taking a commission, and earns interest on the loans, of which 99.7 percent have been repaid so far, according to Masha.   The key is creating farm organisations, or franchises, which can produce a reliable, high-quality yield that buyers can count on, he added. Halliru Saleh, a franchise leader, told AFP in a phone interview that with Doreo's partnership he has boosted his per-harvest output to 400 bags of maize from 35. His workforce, meanwhile, has shot up from five to 100. Perhaps most crucial is a guaranteed nine percent return that Doreo has promised his "high net worth" investors because, like the agriculture minister, Masha believes the best way to ignite a revolution in the sector is to offer wealthy people a chance to get wealthier. "If I said (to investors), 'Hey guys, it's the right thing to do, please help my farmers'... I create 100 jobs," he said. Creating millions of jobs requires "a value proposition that brings together the right group of partners," he added. - Cutting out the 'crap' - Because decades of weak governance has left Nigerian agriculture in disarray, Masha argued that it was now time for the private sector to lead. Adesina, named African of the Year by Forbes magazine in 2013, largely agreed. Policies he inherited that were nominally designed to help farmers had in fact become money laundering schemes, he said, specifically pointing to a subsidised fertiliser programme which was "terribly corrupt" and "terribly inefficient". Among his top priorities as minister, he said, was "to cut out all the crap within the system" and forge policies that allowed private investors to get rich. A signature example is the government-backed creation of so-called processing hubs to address Nigeria's massive infrastructure gaps, especially poor power supply. At the hubs, the government aims to provide full-time electricity so firms can set up processing plants without the burden of running a generator, a prohibitive cost that keeps many foreign companies away from Nigeria. At the conference, he boasted that Africa's richest man, Nigerian industrialist Aliko Dangote, had invested $2.5 billion in agriculture and urged smart investors to follow his lead. "When you see cassava," he said, referring to one of Nigeria's staple crops, "just think money."