Olajide Olutuyi, Co-Founder/ CEO, Top-Olax Energy Limited

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Subjects of Interest

  • Frontier and Emerging Markets
  • Private Sector Development
  • Sustainable Development

"Agbado" and the Nigerian economy 13 Jul 2023

"Agbado", Yoruba word for corn or maize, has gained more popularity in Nigeria since the campaign season leading to the country’s 2023 presidential election. Then-National Leader of the ruling party, All Progressives Congress (APC), Bola Ahmed Tinubu, unwittingly helped to increase the popularity of the farm produce. While speaking at the 12th Tinubu Colloquium to mark his 69th birthday in Kano in 2021, Tinubu recommended the recruitment of more Nigerians into the military to fight internal insecurity. Such young recruits, according to the now-incumbent President, would have access to an abundance of food, including "agbado" and cassava. Although these two popular crops were mentioned, the latter has trended more.

Readers of this column would recall my previous series on food and cash crops that are grown in Nigeria. The first article in the series highlighted the impact of cocoa production on Nigeria's economy as a top agricultural export. The second emphasized the importance of reviving palm oil production, while the third focused on resuscitating the cassava industry. This current piece is unrelated to any political undertones surrounding the 'agbado' comment and its subsequent surly, political usage on the ‘Nigerian section’ of the social media.

It is important to note the critical role of cash crops, food crops, and agribusiness in addressing some of Nigeria's economic challenges, especially poverty and food insecurity. Agriculture is essential to meeting many of the 17 Sustainable Development Goals (SDGs) as acknowledged by the United Nations. And maize is the most widely grown and in-demand crop globally. It is considered the topmost grain worldwide, not least because of its numerous benefits as the primary source of calories in animal feeds.

Although its origin remains uncertain, historians widely accept that the grain was initially cultivated for consumption in the Tehuacan Valley of Mexico. Despite its unknown origin, the demand for corn has grown exponentially over the years. The United States, China, and Brazil are the top producers globally. Africa produced a total of 90 million metric tons (MMT) of maize in 2020, with Nigeria responsible for about 11 MMT. This makes the country the second-largest producer of the crop in Africa. South Africa is the top producers and Ethiopia is third.

Maize is the most consumed staple food in Nigerian households, followed by cassava, rice, and cowpea grain. While agriculture accounted for 22.35% of Nigeria's gross domestic product in 2021, maize alone contributed 5.88% to the GDP. However, the reluctance of farmers in the country to switch from low-yield varieties of the crop to improved, hybrid seeds has been a hinderance to raising output. To meet local and export demands, the Nigerian government must support farmers with necessary tools and resources. Inadequate capital is a significant challenge for maize farmers in the country.

Africa exports 1.8 MMT of maize worth US$464.9 million in 2019, while importing 12.5 MMT of the product worth over US$4 billion, according to PWC’s Positioning Nigeria as

Africa's Leader in Maize Production for AfCFTA report. The major importing-countries in Africa are Algeria, Morocco, and Tunisia. Argentina, Ukraine, Brazil, Romania, and the United States are the largest suppliers.

Nigeria has the potential to become a top earner from the exportation of maize. Data on maize production showed that Nigeria's production increased from 10.1 MMT in 2014 to about 11 MMT in 2020. If properly harnessed, Nigeria could potentially earn more revenue from maize than oil, with the price of maize hovering at around $150 – $160 per metric ton. The country has what it takes to make it to the top of the maize production chain and become a significant contributor to global supply.

According to Poultry Association of Nigeria (PAN), maize accounted for roughly 50-70% of the components for poultry feeds in 2020. Beverage companies  tilize approximately 25% of the national maize output, while the remaining 15% is consumed for food. As a result, Nigeria currently consumes all its maize production, leaving nothing for export.

Raising the national output faces further challenges beyond the lack of adaptability by largely illiterate farmers. Nigeria lacks advanced technology, favourable government policy, and adequate infrastructure to support agriculture unlike Brazil – a developing country like Nigeria. In the US, maize is used for animal feed and ethanol production, with prices rising due to increased demand. Nigeria must act quickly to increase production to meet local and, potentially, export demands.

It is noteworthy that Ukraine, which has been fighting a war with Russia, is the largest maize producer in Europe. This suggests that other maize exporters can fill the supply gap that is likely to have been caused by the war. However, the European Union holds significant influence over the global maize market, contributing a substantial amount to the world's maize production. Based on Statista's 2019 data, the EU produced over 66 MMT of maize, accounting for approximately 5.8% of the global output.

For Nigeria to have a significant slice of the export market for maize, government must play an adequately supportive role. According to Retson Tedheke, Managing Partner at NFGCS Farm Estate, “government must not only drive agribusiness, but government must also be deliberate in formulating policies that recognise, embrace, and promote agribusiness as a national strategy and priority for development and revenue generation.”

In raising the output of maize production in Nigeria, some of the challenges the government can help in solving include lack of infrastructure, limited access to credit by smallholder farmers, and low adoption of modern farming techniques. Nigeria's top ten maize-producing states contribute two-thirds of the country's production, as stated in the report by PWC. The report affirms the country’s potential to become Africa's leading producer of maize.

Initiatives like the Central Bank of Nigeria (CBN)’s Anchor Borrowers Programme (ABP) can address the financing challenge if professionally managed. The ABP offers loans and farm inputs to smallholder farmers for various crops, including maize. It also connects farmers with agro-processors to sell their produce.

However, Nigeria must review its export ban on maize to take advantage of the African Continental Free Trade Area (AfCFTA) and provide support to maize farmers. High-yield, disease-resistant maize seed varieties, like the one that was developed by the Institute of Agricultural Research and Training (IAR&T), named "Ife maize hybrid 1 to 8", can also boost output. With many African countries as net-importers of maize, AfCFTA, which seeks to boost intra-African trade, is enabling for Nigeria to tap the continent’s export markets.

President Tinubu assured that he is committed to strengthening the agricultural sector; he enumerated several measures in his manifesto for achieving this goal while running for the office he now occupies. These measures include establishing commodity boards to set minimum prices for crops, collaborating with the private sector to improve commodity exchanges, and constructing storage facilities for fresh produce. He further pledged to support farmers by improving rural infrastructure, providing financial assistance, and encouraging farm cooperatives.

Tinubu’s proposed “Irrigate Nigeria Project” promises to also implement programmes to increase food production, create employment opportunities, and support local farmers. It also aims to use uncultivated land for farming purposes.

Strengthening the agricultural sector output will reduce the dependence on oil and gas for government revenue. It will also provide investment opportunities for Nigerians, especially the youth. However, at these early days of the President Tinubu administration, there is uncertainty on the implementation of his campaign promises – including for agriculture.

Olajide Olutuyi, a Financial Nigeria Columnist, holds first degrees in Computer Science from the Federal University of Technology Akure (FUTA) and Management from the University of Lethbridge, Canada; an MBA from the Australian Institute of Business; and a certificate in Social Impact Leadership from University of California, Berkeley, Haas School of Business. He is an Instructor at Bow Valley College's Chui School of Business, Calgary. He is also the Co-Founder/CEO Top-Olax Energy Limited and the Executive Director, Samuel Olutuyi Foundation. Email: Olajide@samuelolutuyifoundation.org.