Why are Nigerian high net-worth individuals not interested in the business of large scale commercial agriculture? What are they not seeing the opportunities in Agriculture?
The reason, according to financial planning expert Kalu Aja, is situated in the Nigerian mindset about agriculture being hard, low-paying and back-breaking work and this is responsible for why the sector’s riches remain largely unscratched.
In a series of tweets, Aja first established that savvy foreigners who know that agriculture is Nigeria’s new crude are already heavily investing in the sector. They can clearly see the opportunities in agriculture.
“I once had the pleasure of being in a room with Nigerian multimillionaires. They were discussing investments so I listened.
“The Nigerians were having a discussion with a Mexican from the San Carlos Company, the Mexican selling agriculture as a business to the Nigerians .
“The Mexican invested in a pineapple farm in Enugu and now exports pineapples from Nigeria. The Mexican explained that Nigeria enjoys excellent trade terms with Europe and the US so San Carlos Pineapples are categorized as “Nigerian” thus allowed to enter the European Union,” Aja narrated.
But, much as the Mexican laboured to explain, the Nigerians were not impressed.
According to Aja, the Mexican told his audience that he was making good volume exports from Enugu as his dollar costs were lower in Nigeria than Mexico even though he exports and earns same dollar per tonne for his Pineapple.
Yet, the Nigerian millionaires were still not convinced.
Undeterred, the Mexican told them about his foray into tomato production after he had studied that local demand was constant but supply was seasonal.
He said it was a great opportunity for any investor who could set up greenhouses and supply tomatoes all year round locally.
Seeing that his audience were intransigent, the Mexican offered them a deal.
“Ok, I will make a deal with you all. If you invest in tomatoes, I guarantee I will buy up all your output.”
The Nigerians refused to take that offer but nobody could blame Carlos the Mexican for not trying hard enough. He just faced a tough crowd.
Aja picked up the thread of his story and quoted the Executive Secretary, Agricultural Research Council of Nigeria (ARCN), Prof. Baba Abubakar as saying Nigeria is the largest importer of US hard red and white wheat worth N635 billion annually as well as the world’s number two importer of rice at N356 billion.
The financial planner then goes on to examine the statistics in greater detail to prove that foreign firms are aware of the immense opportunities in agriculture and massively investing in it.
He asserted that Nigeria’s two largest wheat millers are both foreign-owned.
Flour Mills and Olam are owned by the Excelsior Shipping Company Limited and Olam of Singapore respectively.
Aja puts forward the same argument for rice and palm oil as to their ownership.
WACOT Rice, Africa’s largest rice mill which is located in Kebbi state with 120,000 metric ton capacity, is owned by TGI Group, a European concern.
Even the second largest rice mill, located in Nasarawa state, is owned by the Olam Group of Singapore.
The country’s largest Oil Palm refinery, Presco Plc is owned by SIAT, a Belgian company which is investing $30m in a palm oil refinery.
For a country that had a rice import bill of N1billion per day according to 2016 figures, it is bewildering that the legion of Nigerian millionaires still do not see the need to invest in Agriculture, Aja argued.
Using Transcorp, a omnibus financial giant created in 2006, by then President Obasanjo as a “functional platform for the projection of the nation’s economic potentials,” Aja argued that Agriculture was not one of its core area of focus at inception.
Transcorp was designed to provide the vehicle that Nigeria needs to mobilise capital on a very large scale for investment in projects that had hitherto been the exclusive preserve of foreign investors.
“Transcorp was Nigeria’s response to foreign multinationals. She was modelled after the South Korean Chaebols, great move. In her first full year of operation, Transcorp acquired the NICON Hilton Hotel in Abuja.
“Bureau of Public Enterprises pencilled Transcorp for the acquisition of Nigerian Telecommunications (NITEL), the Port Harcourt Refinery & the National Clearing & Forwarding Agency. Transcorp also designed an entry plan for participation in the development of strategic oil blocks.
“So when the Federal Government, with the backing of the President, decided to pool Nigerian billionaires & invest in the Nigerian economy, no one bothered to invest in a Rice or Wheat mill?
Why, he asked rhetorically before going ahead to provide the answer himself.
It is a perception issue. Agriculture is still viewed in Nigeria as hard work, rural, & not a business.
Kalu then warned ominously that Nigeria can no longer ignore the goldmine that Agriculture is.
“Unless the mindset about agriculture is changed, and agriculture begins attract Nigeria best and brightest, Nigeria will continue to export Cocoa beans and import Chocolate,” he warned.
What opportunities in agriculture can you see?