INTERVIEW: Multiple Taxation, Both Legal & Illegal, Are The Other Impediments Affecting Price Of Products In Nigeria

Farouk Kurawa.

In this interview with Daniel Essiet of The Nation, Dr. Farouk Kurawa, the Managing Director of CropIT Nigeria Limited and the House of Representatives Aspirant for Kano Municipal Federal Constituency under the platform of the New Nigerian People’s Party, NNPP, explains that the macroeconomic environment has put farmer profitability under some pressure and other factors adversely impacting agro-processing and thinning margins.

What are the greatest obstacles to improving rates for arable land in Nigeria?

The greatest obstacle is limited prepared land for cultivation due to lack of investment on land development. The cost is usually very high and can only be borne by the government. This shall be part of its investment in infrastructural development to support private sector investment in agriculture and agribusiness. There was a time significant investment was made into land development by the Federal Government to open up new farm lands for cultivation. That helped to a great extent, through the establishment of the National Agricultural Land Development Authority (NALDA) in 1992. The main objective was optimum utilisation of the nation’s natural land resources. Unfortunately, as at the time of this discussion, there hasn’t been the required support and funding to actualise this objective of opening up more land for agricultural purposes.

How can the sourcing of local raw materials be improved in the country?

This is a very important aspect of the value chain and requires huge investment in backward integration by processors/manufacturers and other end users of raw materials. Sourcing raw materials from a single source improves the quality of the end product as opposed to buying from open markets. For the country to be self-sufficient in food production and feed its increasing population by the day, there has to be more land area for cultivation. At the moment, only about 20 per cent of the total 80 million hectares arable land is under cultivation. If this percentage is increased, Nigeria will, definitely, increase production.This will increase crop production, processing and enable our companies to be operating at near optimal capacity and generate income to pay-off investment. Similarly, the capacity of the country to feed itself will be increased. Example is what has been happening in term of local rice production and processing.

Where do you see as the greatest scope for improving efficiency of supply chains?

I see availability of pure and improved seeds. In Nigeria, many smallholder farmers use saved grains as seeds and even some seed companies buy grains, clean and dress to be sold as seeds. Significant investment shall be directed at research and development of improved varieties and training and sensitisation of Smallholder farmers (SHF) is equally very important. Another area requiring attention is post-harvest handling to minimise losses. At the moment, SHF suffers up to 40 per cent through inefficient post-harvest handling. Similarly, logistics and storage as greatest opportunities to improve the efficiency of value chains. Most of the inefficiencies centres on the points mentioned above.

How would you rate the attractiveness of Nigeria’s staple crop processing zones?

My assessment of Nigeria’s Staple Crop Processing Zones (SCPZ) was established to increase food production and processing. The rate of attractiveness of SCPZ is dependent on a number of issues: it has long gestation period and requires a very strong political will and commitment from the government; it requires a very strong financial support. Not all private sector investors would like to take the risk of investing and wait for a very long period of time. My assessment in this regard is very low.

What are the challenges agricultural and food processors face in West Africa?

Major challenges agriculture and food processors are facing in West Africa are general and cut across most of the value chains. They center on limited or unstable power supply as well as high cost of power due to usage of diesel and other sources of power. Similarly, there is high cost of raw materials as a result of crude or subsistence method of farming (in most cases, mechanisation is very low). Availability of good/quality raw materials is also a challenge. SHF unless they were trained and well-coordinated will not produce to the desired need of the user. In addition, logistics challenges and high/multiple taxation is prevalent and constitute major challenge to processors.

In your opinion, which country is a role model for rural development in Africa?

This depends on different indices – agriculture, SMEs, specialisation etc. For example, Sudan is a role model in terms of success in wheat value chain development; Kenya for SME development and mobile money transaction and innovation; Nigeria with huge population and availability of cheap labour etc. Also, Ghana is well known for its industrial development due to stable power supply and security. While South Africa being an African Hub for most of the manufacturing companies in Europe and the Americas. Cote d’Ivoire, before the crisis, was in the forefront of rural development. Sudan is doing very well on wheat value chain despite being a poor country etc.

What steps should be taken to drive agribusiness and the processing of raw materials?

I believe agricultural challenges should be addressed in a way that supports the viability of farming units. From my view, the scale of production matters to generate levels that will make agribusiness financially viable. We need to make investment in research and development for good quality seed, capacity building and sensitisation of farmers. This will produce good quality raw materials for processors and affect the end product. In addition, there has to be deliberate effort in ensuring availability of good quality processing equipment at affordable price, investment in infrastructure to provide ease of movement of raw materials and other finished products, most importantly, putting in place good security architecture to safeguard primary producers and other important stakeholders.

Many smallholder farmers live in poverty. What are some of the reasons such a critical population is poorly compensated?

In our country, it is very clear that not all smallholder farmers consider themselves as being in business as opposed to what obtains in other countries. This is due to the mindset that agriculture is not a business but just subsistence farming. Everything depends on subsidy by the government which more often comes very late. A serious farmer shall use his money and pay for improved seed, fertiliser, provided he knows the statistics and he is convinced that he is making money. In Nigeria, most of the SHF only wait for government subsidies, input, which come extremely late and affect the crop performance. Serious orientation, capacity building in business skills is required. The government shall only channel its subsidy programmes through private sector. For example, it engages private sector to provide fertiliser in good time at subsidised rates while farmers pay the difference and government pays its subsidy portion.

Dr. Farouk Kurawa.

What should further be done to enable smallholders scale up and commercialise their operations?

We have talked about access to land, infrastructure, marketing, distribution system, technical support and access to financing and all that. For those in the perishable produce sector, they need finance to deploy customised/temperature control vehicles for perishable products, customised rubber crates for tomatoes, livestock and fisheries, among others. This help to improve the lifespan of commodities and increase income of the stakeholders. Generally, we have to promote the use of Purdue Improved Crop Storage (PICS) bags to store grains without any use of agrochemicals. PICS bags allow farmers to store their grain without the use of insecticides, and provide them the flexibility to sell when prices are high. In addition, the use of cocoons to warehouse grains will go a long way in extending the life span and safety of grains. (a temperature controlled), which prevent insects to survive and infect the warehoused grains. We are passionate for rural development, and strong on the issue of inclusive growth. We are working hand in hand with the government and other relevant stakeholders to ensure provision of good and access roads in the rural areas as well as maintenance of the highways to provide for easy passage by motorists transporting agricultural commodities. We support initiatives to address the major shortcomings faced by the agribusiness sector, especially elimination of illegal taxes and harmonisation of approved taxes, to reduce burden on transporters and agribusiness owners.

The problems of transportation and storage have been identified as key impediments to agriculture and agro-industry in Nigeria. How can we solve these problems?

Transportation and logistics are major challenges negatively affecting movement of goods and services in Nigeria. Our roads are not motorable and this affects the ease with which the goods move. Spoilage and breakdown along the road all affects the quality of what is delivered to locations. In addition, multiple taxation (both legal/illegal) are the other impediments affecting price and other indices of the products. In the case of storage, there is serious lack of appropriate storage facility to store either perishable or non-perishable products. For example, livestock, fisheries, vegetables etc. Similarly, agrochemicals are being used or applied on some grains to avoid insect’s infestation which negatively affects the quality and health conditions of the products.

Explain what CropIT Nigeria Limited does, where you operate and what makes your approach effective/unique?

CropIT is a full-stack Agtech company with robust technology and extensively trained and digitised agricultural extension agents who work with farmers to enhance agricultural productivity. We provide extension delivery and advisory services, monitoring and evaluation of production and post-harvest activities, farmer and grain aggregation, mapping, data capture, effective capacity building and risk management. Our vision is to be the foremost agribusiness solution platform in Africa. Our mission is to deliver effective and flexible agribusiness solutions that will improve the performance of our clients through innovative, digital, precision and climate-smart agriculture. CropIT is a service provider of field monitoring and evaluation. Our services are to financial institutions and producer associations to prevent loan default and ensure full repayment. We equally provide remote sensing and report performance of crop in the field via a dash board to clients. Our services are considered as unique in the sense that, it reduces risk and limit use of physical resources to assess crop performance and provide extension services.

What are the challenges you face while scaling up across various geographies and how you went about solving those challenges?

We only see challenges of insecurity in terms of scaling up operations to areas where there is insecurity. Apart from that, we are service providers and we go to any location where our client wants us to go and monitor projects. The only thing is that we may require additional resources to reach out. On the issue of behavioural challenges; since we recruit, hire and have in our list extension agents in project locations, we are not affected by behavioral because we have people working for us who are indigenes of the communities. Local content is very important in this regards.

In simple terms, can you give us comparison figures of savings/earnings farmers can make using your solutions?

General summary is that farmers will have on the spot technical advice, resolution of any anomaly noticed in the field and prevention of post-harvest losses and has business skills training. In terms of figures, we may not be able to provide in absolute terms. What we are confident about is our ability to increase crop yield, prevent post-harvest losses and help lenders to minimize default. Effectiveness of our services also depends on the commodity we are talking about and the intervention or services provided.