121
Tuesday 06 November 2012
BUSINESSDAY: www.businessdayonline.(om
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Growing agriculture to save foreign exchange
Frank Algbogun mROI-III-CHItI Prof Onwuchekwa jemiE'
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IWllRI. STSTOIS & eal'Ul FatM.ln Akagha
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the ' lederal Govern ment ', de termination 10 revicalise the agrlcuhure sector b a long loumey thai has slaried well. To make the country (OOd -5Urncienl, particularly bec ause of the recent Inddent~ of Hoods In some parts of Ihe c ounlry, the govern men I will have to redouble il.!! errorl~ 10 ensure ILS plans are nOI derailed. Neverlheless, II I§ worrisome Ihal Nigeria spent N252 bil lion on Imporled food , according 10 secon d qu arter report by Cen tral Oa nk o f Nigeria (CBN)_ Anal )'sls of foreign exchange utilisatio n showed that lhecounlryspenl a lotal of NJ.2 trillion ($7.74 billion ) lmporllng various Items. "The imllOrtot!oJn uf food Items at 21 peTe!!!:n! Is vcceptionallyhigh and !lhould bcdiscourag!!!:d through huge Invesl,ment in theagrlcullUraJ sector by t he go\'ernmenl,
prlvale sector or through public-private partncnhlp; CON noted. To I"callse a revolution In, say, c ocoa, sugal" and ri ce, ma55lve and !lu~tl!llned Invl.!.§tmenlS in Infl"astructure are requlI"Cd to make these products acces~lble to Ihe con!lumen al the urban centres. Mosl fann product!l pe nsh at thevillages either due to lac.k of accessible road~ to bring them to Ihe cilles 01" absence of~lorage fac ilities. FOI" instance, most cas!lava processors want fres h cassava - for ethanol, animal feed , floul" milling, starch, glucose, elc. lJeyo nd a distance, tmnsport costs exceed value o f Ihe produ c t . Pro cessors wUJ need nnance to either Inlegrale ba ckwards Into tmnsrorlation or situate a fa clory close to Ihe farm . Specialised logl s ti c8 firm can explore the pros peci 10 operate mohile cold storage vehicles rrom rarm -ga te to faclory.According 10 USAID,
farmers that adopt 3n estate c auava production model can make a l)rontofNI04 ,Z95 per hectare. Banks are not hell)ing matters. According 10 CRN 's reCf':nl figures on rates by banks relea se d last week, lending rat es to agrlc, manu ractudng, 011 and gas have reached the official maxi mum of 30 perce nl (u nofficial rate goes for between 32 and 35 percent ). " In many cases ( Including Nigeria), Ihe differential between de posit / saving!! rate!l and Rx:ed income yields Is such that Ihere Is limit ed incentive to lend to the I"eal economy," says Samlr Gadlo, emerging marke ts stm teglst, Sta ndard Dank, london. BOllks' sea rch foroutslud s prea ds Is una cce pt a ble , Ihough Ihey correctly blam e external Inefficiencies, e.g., unstable power su ppl y, ror high overheads. But thai Is not Ihe only reason. Nigeria banks need In go on a slim -
mlng die t, cOl1talning operat· ing COSI. To achieve efficien · cy-scale, Nigerht banks need to reroc us attention on new client.!! and greener pastures: smallholder fa rmel"5 organised as cooperali ves. Po licy consistency will altmct bankers. Ken Iwelumo, a form er senior vice presi dent at Rank of Amerlca l Merrill lynch, reckons banks have "to conte nd with .. udden draSliC.!Itructu rol cha nges orc he!llrat ed hy the CUN which forces current bank management leanlS to ht' eJl:trcmely ca uti ou'l In Ihelr husiness plans and outlook." 111err Is therefore Ihe urgellc need for government 10 Intensify errort'l at publicprivate partner'lhip fur Ihe provl'llol1 of Infrastructure. This will go a IUllg way in reducing our hcavy reliance on importaliolluHoud items and USE' the resources for oth er important aspecls like illVe!llment III the non -oil secto r oflhE' economy.
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