FG Bud­gets N 3.4Bn For Rice, Cot­ton Value Chain

Sunday Trust - - FRONT PAGE - By Nu­rud­deen M. Ab­dal­lah, Vin­cent A. Yusuf, Fran­cis Arinze Iloani, & Sa­fina Buhari

The fed­eral gov­ern­ment is plan­ning to spend N3.47 bil­lion on the de­vel­op­ment of value chain of rice and cot­ton - the two ar­eas gov­ern­ment said it is de­ter­mined to at­tain self­suf­fi­ciency.

This fig­ure is about N200 mil­lion less than what the gov­ern­ment bud­geted last year, ac­cord­ing to the anal­y­sis of 2018 bud­get pro­posal.

De­spite series of in­ter­ven­tions by fed­eral gov­ern­ment, agri­cul­ture has failed to at­tract ad­e­quate pri­vate in­vest­ments and gen­er­ate de­cent job op­por­tu­ni­ties.

Dwin­dling for­tune of value chain

In 2017, the fed­eral gov­ern­ment bud­geted N3.63 bil­lion in value de­vel­op­ment of rice and cot­ton.

The key area of agri­cul­tural de­vel­op­ment with the po­ten­tials to cre­ate mil­lions of jobs is in the var­i­ous crops value chain de­vel­op­ment, which the gov­ern­ments at all lev­els are pay­ing little at­ten­tion to.

Anal­y­sis of the 2018 es­ti­mates re­vealed that the fed­eral gov­ern­ment has pro­posed N24.9 bil­lion on agri­cul­ture value chain de­vel­op­ment, about 14.7 per­cent re­duc­tion on what it bud­geted last year.

In 2017, the to­tal bud­get for agri­cul­tural value chain de­vel­op­ment was N29.2 bil­lion.

Of the N24.9 bil­lion value chain votes this year, only N3.47 bil­lion was ear­marked for rice and cot­ton against last year’s N3.63 bil­lion, de­spite the gov­ern­ment’s trum­peted com­mit­ment to the de­vel­op­ment of the two crops.

This year, the fed­eral agri­cul­ture min­istry ear­marked N1.47 bil­lion for de­vel­op­ment and pro­mo­tion of cot­ton, against last year’s N1.62 bil­lion.

The gov­ern­ment ear­marked N2.04 bil­lion for rice value chain, com­pared to the N2.01 bil­lion pro­vided for the crop in 2017.

Data from the Fed­eral Min­istry of Agri­cul­ture and Ru­ral De­vel­op­ment shows coun­try’s de­mand for rice stands at 6.3 mil­lion tons, while the sup­ply is 2.3 mil­lion.

The min­istry said the cot­ton de­mand is be­tween 1-1.5 mil­lion tons while the sup­ply is 0.2 mil­lion tons.

As of 2015, over 101 tex­tile in­dus­tries were closed and 121,000 jobs lost across the coun­try, ac­cord­ing to Dr Fatai Aremu of the De­vel­op­ment Re­search and Pol­icy Cen­tre (dRPC).

He said 60 tex­tile firms were closed in La­gos and 66,252 jobs lost; 19 com­pa­nies shut down in Kano and 16,700 jobs lost; 8 firms were closed in Kaduna which ren­dered 18,750 work­ers job­less; while19,300 jobs were lost due to the col­lapse of 18 fac­to­ries across other lo­ca­tions in the coun­try. Too little to make im­pact This is com­ing at a time of the gov­ern­ment’s much-trum­peted de­ter­mi­na­tion to move away from oil to agri­cul­ture as the main­stay of the econ­omy.

This year, the fed­eral gov­ern­ment is plan­ning to spend N172.78 bil­lion, about two per­cent of the to­tal es­ti­mates of N8.6 tril­lion, on agri­cul­ture and ru­ral de­vel­op­ment.

Of this fig­ure, N118.98 bil­lion (68.86%) is ear­marked for cap­i­tal votes, while N53.81 bil­lion (31.14%) is for re­cur­rent expenses.

The 2018 fed­eral agri­cul­ture bud­get is 27.48% higher than the 2017 bud­get. Cap­i­tal ex­pen­di­ture got 69.48% in­crease, while re­cur­rent es­ti­mates were jerked up by 14.64%.

Of the N7.3 tril­lion bud­gets for 2017, the fed­eral gov­ern­ment voted only N123 bil­lion (1.6 per­cent) for agri­cul­ture. Salaries and over­heads get N31.7 bil­lion while the re­main­ing N91.6 bil­lion was left for cap­i­tal projects.

The cen­tral gov­ern­ment bud­get is slightly higher than the N75.8 bil­lion (1.26 per­cent) spent on agri­cul­ture and ru­ral de­vel­op­ment in 2016.

N29.6 bil­lion of the amount was for bu­reau­cratic expenses, leav­ing N46.17 bil­lion for agric ser­vice.

The fed­eral gov­ern­ment has been al­lo­cat­ing low fig­ures to the sec­tor since 2010. It bud­geted 1.3 per­cent in 2010, 1.8 per­cent in 2011, 1.6 per­cent in 2012, 1.7 per­cent in 2013, 1.4 per­cent in 2014, 0.9 per­cent in 2015 and 1.2 per­cent in 2016. Long walk to Ma­puto This year’s agri­cul­ture bud­get, just like last year’s, is far be­low the 2003 AU-Ma­puto Dec­la­ra­tion on Com­pre­hen­sive Africa Agri­cul­ture De­vel­op­ment Pro­gramme (CAADP) which Nige­ria is a sig­na­tory, DrAremu said.

The Ma­puto dec­la­ra­tion re­quires African coun­tries to al­lo­cate at least 10 per­cent of their an­nual bud­gets to agri­cul­ture and achieve six per­cent an­nual growth in agri­cul­tural GDP.

Other sig­na­to­ries to the Ma­puto agree­ment such as Malawi are in­vest­ing about 27 per­cent, Zam­bia, Bu­rundi and Mali (10 per­cent); Niger (13 per­cent); and Sierra Leone (3 per­cent) in agri­cul­ture. Poor value chain, few jobs Agri­cul­ture has been con­tribut­ing gen­er­ously to the GDP. In 2012, the sec­tor con­trib­uted 23.91 per­cent to the GDP, 23.33 per­cent (2013), 22.91 per­cent (2014), 23.11 per­cent (2015), and 24.43per­cent (2016).

But this didn’t trans­late to ac­tual paid jobs, like other sec­tors, Dr Aremu said. He said though agric has con­trib­uted 49.1 per­cent of “main jobs,” it only cre­ated 0.9 per­cent “paid jobs.”

This con­trasted with trans­porta­tion and stor­age, which cre­ated 3.9 per­cent main jobs but pro­vided 4.6 per­cent paid jobs be­cause of the value ad­di­tion com­po­nents in that sec­tor, ac­cord­ing to data from Na­tional Bureau of Sta­tis­tics Un­em­ploy­ment Sur­vey 2014.

Al­though Nige­ria is a ma­jor pro­ducer of most of the crops within the West Africa sub-re­gion, its value chain de­vel­op­ment is far be­low that of Ghana, Kenya, Ethiopia and South Africa who are har­vest­ing bil­lions of dol­lars in the value chain sub-sec­tor.

The value chain has the po­ten­tials for nur­tur­ing hun­dreds of cot­tage in­dus­tries, which are key to de­vel­op­ing econ­omy like Nige­ria.

Nige­ria re­mains a pro­ducer of pri­mary prod­ucts and has an in­signif­i­cant share of the global mar­ket even in the crops that she is the world largest pro­ducer of yams, cas­sava, and oth­ers.

Ghana, for in­stance, is the largest ex­porter of yam to the world mar­ket but it pro­duces less than what one state pro­duces in Nige­ria.

The bulk of what is ex­ported from Ghana comes from Nige­ria, gain­ing bil­lions of dol­lars from what Nige­ria is pro­duc­ing through value ad­di­tion. Sorry story of cot­ton Al­though the fed­eral gov­ern­ment dur­ing the last ad­min­is­tra­tion set up an N100 bil­lion for cot­ton, Tex­tile and Gar­ment De­vel­op­ment Scheme “man­aged by the Bank of In­dus­try (BOI), to re­vi­tal­ize the CTG In­dus­try along the en­tire value chain at an in­ter­est rate of 6 per­cent per an­num with tenor up to five years, lack of sus­tain­able value chain or the col­lapse of it also led to the col­lapse of cot­ton pro­duc­tion.”

Many farm­ers are now leav­ing cot­ton for other crops, a sit­u­a­tion that calls for con­cern, an­a­lysts said.

Sim­i­larly, a re­port by In­ter­na­tional Cot­ton Ad­vi­sory Com­mit­tee (ICAC) shows that Nige­ria has 51 gin­ning com­pa­nies but only 17 are fully op­er­a­tional with 33 per­cent gin­ning ca­pac­ity uti­liza­tion and ap­prox­i­mately only 250, 000 cot­ton farm­ers.

Nige­ria does not have any na­tional pol­icy that pro­tects the cot­ton in­dus­tries - look­ing at the en­tire value chain.

Na­tional Pres­i­dent of the Na­tional Cot­ton As­so­ci­a­tion of Nige­ria (NACOTAN) Mr. Anibe Achimugu said, “with the amend­ment of Pro­cure­ment Act for lo­cal con­tent to be sourced first, we hope things will change. If the uni­forms of our schools, army, navy, air force, im­mi­gra­tion, cus­toms, etc, were all sourced lo­cally, many of the tex­tiles in­dus­tries would not have closed.”

For di­rec­tor gen­eral of the Nige­rian Tex­tile Man­u­fac­tur­ers As­so­ci­a­tion (NTMA), Hamma Kwa­jaffa, “the prob­lem is ac­tu­ally smuggling. You know our deal­ers can go to China- and in China any­thing you ask for they can do it for you, and this ends up in Nige­rian mar­kets.” More value for rice Dr Aremu said the fed­eral gov­ern­ment’s An­chor Bor­row­ers Pro­gramme though in­no­va­tive, but it is dif­fi­cult for new en­trants, no in­clu­sion clause and no clear syn­ergy with Fed­eral Min­istry of In­dus­try, Trade and In­vest­ment.

Dr Nyam Leo, for­mer re­gional di­rec­tor of the Agri­cul­tural Trans­for­ma­tion Agenda (ATA), North­west zone, said due to lack of ma­chin­ery, rice farm­ers lose huge parts of their har­vests.

For Aliyu Sa­maila, di­rec­tor of Agri­cul­tural Pro­duc­tiv­ity, MAR­KETS II pro­gramme of USAID, the sit­u­a­tion is im­prov­ing.

“If you look at the An­chor Bor­row­ers’ Pro­gramme which started with the rice value chain, it has al­most tripled rice pro­duc­tion in Nige­ria,” he said.

Dr Aremu said wage em­ploy­ment is now a mat­ter of na­tional se­cu­rity and the gov­ern­ment must be in­volved.

“It is there­fore en­cour­ag­ing to hear that the Nige­ria In­sti­tute of Leg­isla­tive Stud­ies and the Dutch Knowl­edge Plat­form for In­clu­sive De­vel­op­ment (IN­CLUDE) in col­lab­o­ra­tion with the Part­ner­ship for Africa So­cial and Gov­er­nance Re­search are work­ing to­wards in­form­ing na­tional poli­cies on in­clu­sive growth. Growth is in­clu­sive is it cre­ates jobs and im­proves wages for or­di­nary peo­ple,” he said.

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