NIGERIA-CANADA INVESTMENT SUMMIT De-Risking Investment in The - - PowerPoint PPT Presentation

NIGERIA-CANADA INVESTMENT SUMMIT

De-Risking Investment in The Agricultural Sector – The Path to Economic Recovery & Independence

Presentation by:

• MR. ALIYU A. ABDULHAMEED

MD/CEO NIRSAL 5th November 2019

Contents

Opportunities and Unfolding Prospects in the Nigerian Agriculture Sector NIRSAL’s Role in facilitating appropriate Financing to enable Agriculture Value Chains Conclusion

1 2

1

3

Opportunities and Unfolding Prospects in the Nigerian Agriculture Sector Section 1

2

Nigeria is blessed with four (4) major Agricultural Opportunities…

3

84 million hectares of arable land with less than 50% in use LAND Predictable rainfall pattern; Billions cu. m of surface and underground water WATER Huge supply of labour – over 90 million population aged 15-65 years LABOUR Huge consumer market with unsatisfied demand MARKET

4

Additional factors are in favour of Nigeria’s Agriculture

Government/ Policy Focus on Agriculture Rapid population growth – local, regional, global Rapid urbanization Rising middle income High supply deficits/ US$22bn import substitution AfCTA signature $5trillion global food industry Foreign trade policies e.g. US-China Trade Wars

In spite of skepticism, several factors create a compelling business case for finance and investments in Agribusiness in Nigeria

Source: OECD-FAO Agricultural Outlook 2018-2027, McKinsey 2015, NIRSAL Analysis

The Agriculture sector has the potential to grow to a rate of

8.37% in real terms

By 2020

The Agriculture sector grew @ a rate of 2.12% in real terms

In 2018 full year

The Agriculture sector:

NGN17.5 Trillion

(Real/ Constant Prices)

NGN21 Trillion

(Real/ Constant Prices)

* Source: NBS 2018 Reports & ERGP

5

The Agricultural sector remains one of Nigeria’s greatest hopes for economic growth and development

Nigeria’s agricultural production can be increased by over 159% by 2036

Agriculture Production in Nigeria

Nigerian Naira, Billions, Constant 2010 prices

38,400 5,355

+159%

10,380 14,850 7,815 2016 Increased Yield Increased Acreage Shift to Higher Value Crops Potential 2036

Current Additional potential1

1 Es*mate based on modelling in McKinsey’s ‘Lions on the Move: The Progress and Poten*al of African Economies ͘ For ‘increased yield’, large farms in Nigeria to reach 90% of yields of developed agricultures; smallholder farms to close 80 - 100% of gap to developing country / emerging market level (e.g. Ghana in Yams, Bangladesh in rice)͘ For ‘Increase acreage’ assumes addi*on of 14 m ha new agricultural land, approximately 38% of Nigeria’s unused arable land of 36.9m ha. For ‘Shi] to higher value crops’, assumes shi] of 20% of current cereals produc*on to hor*culture ͘ SOURCE: McKinsey Global Ins*tute; team

Examples of agricultural Commodity Value Chain Opportunities in Nigeria

7 Source: Fishery Committee for the West Central Gulf of Guinea, 2014/2016, PIND, FAO 2017, Business Day, GAIN Report April 2018, NIRSAL Analysis

• Dairy import -

USD1.3bn per annum

• Estimated Cassava

net worth of $8.5bn by 2020

• Bread flour substitution
• c. N254bn p.a.

Commodity Value Chain Opportunities

• 3.2m MT annual Fish

DEMAND

• 2.2million MT Local

SUPPLY DEFICIT

• 4.7million MT annual

Wheat DEMAND

• 250,000 MT local

Wheat PRODUCTION

• US$4.5bn Imports

Pre-Upstream Upstream Midstream Downstream

AVC Segments

• Retailers
• Industrial

Processors

• Export brokers
• Export

Merchants and Logistics

• Fertilizer Agro-dealers
• Seed, CPP & other

Input Distributors

• Tractor & Equipment

Hiring Agents, Operators, Mechanics, etc.

• Research Farmers
• Extension Agents
• Geo-mapping

agents

• Primary

Producers

• f Cereals,

Tubers, Tree Crops Aquacultur e, FFV, Poultry, Ruminants, Apiculture, etc.

• Agro-processors

(extraction, milling, drying, cleaning, etc.)

• Service Providers for:
• Haulage
• Aggregation
• Storage
• Transportation
• Packaging
• Middlemen/

Intermediaries

Agribusinesses

13 *2013 NBS and SMEDAN Report

Examples of agribusiness opportunities along agricultural value chain segments in Nigeria

FINANCE Capital Patient capital to power an agricultural revolution TECHNOLOGY Capital Scientific and technological solutions for increased productivity HUMAN Capital Intellectual and technical capacity for agribusiness EQUIPMENT Capital High-end equipment for mechanisation and commercialisation

The sector however requires the flow of four major capitals

9

NIRSAL’s Role in facilitating Financing that enables Agriculture Value Chains

Section 2

10

Project feasibility and viability Technical capacity

• f promoters

Visibility on fund flows Fall back options, insurance cover Existence of high market demand Track record of success Assurance of Return on Investments Favourable exit plan

NIRSAL understands that the imperatives of Financiers, Investors and Capital Providers must be met to gain their participation in agriculture

Robust Agricultural/ Agribusiness Risk Management

The sector, in spite of challenges, continues to present opportunities for growth

11

Title

“To forge partnerships between agriculture and finance; maximizing the potential of agriculture for food security, job creation and economic growth”

12

NIRSAL

NIRSAL’s Raison d’étre

Technical Assistance Rating Incentives Insurance Risk Sharing

NIRSAL focuses on the upgrade, development and integration of end-to-end agricultural value chains through its MAPPING TO MARKET STRATEGY

Principal Trade Relationship Strategic Trade Relationship

NIRSAL has developed the Mapping to Markets (M2M) concept, an innovative approach focused on transforming the Upstream segment, referred to as the ’black hole’ in the value chain into the gold mine that drives the development of all the other segments.

13

Based on extensive research and analysis, NIRSAL has identified 5-4-3-2-1+ commodities with high market demand, that will be supported (in the medium term) under NIRSAL’s value chain integration approach.

14

NIRSAL’s 5-4-3-2-1+ Commodities are supported in areas of ecological advantage ++

1 2 5 4

VAT specialis m

3

NIRSAL’s 5-4-3-2-1+ Commodities INDUSTRIAL

COMMODITIES

E X P O R T

COMMODITIES

CONSUMER

COMMODITIES

CONTROLLED ENVIRONMENT AGRICULTURE COMMODITIES

INTEGRATED

LIVESTOCK COMMODITY

Maize; Soya; Wheat; Cassava; and Cotton V.A Hibiscus; V.A Sesame; V.A Ginger; and V.A Shea

*V.A: Value Added

Rice; Potato (Sweet & Irish); and Beans Fresh Fruits and Vegetables (Tomato, Onions...); and Aquaculture (in Fish Estates) Beef + Dairy + Hides & Skin and Poultry

*Youth driven Controlled Environment Agriculture Production Systems in 37 State Capitals

* In Integrated Ranch Fodder Bank, Feedlot and Auction Systems

SUGARCANE, V.A CASHEW…

+

TOPLINE Investment/ Financing Opportunities MIDLINE Investment/ Financing Opportunities BASELINE Investment/ Financing Opportunities

MARKETS:

Domestic Consumer, Domestic Industrial and Export

FRESH FRUITS & VEGETABLES**

HIBISCUS SESAME CASHEW SHEA** * COTTON**** RICE + BEANS

***SHEA (COLLECTION + PROCESSING) ****COTTON TO THREAD (CTT)

LIVESTOCK*****

*****LIVESTOCK (POULTRY, BEEF, DAIRY)

MAIZE + SOYA

POTATO (SWEET & IRISH)

AQUACULTURE WHEAT SUGAR CANE

Primary Production, Harvesting, Primary Processing, Primary Transportation and Primary Storage

PHP3

Land Preparation and Seed Processing Services

LPSP

NIRSAL Climate-Smart Irrigation Program for Optimized Smallholder Agricultural Production

NCIS

Smallholder-based Commercial Agricultural Sites and Services (Agricultural land development)

SCASS*

FINANCE

(FDI, CBN, DFIs, Equity Investors, Commercial Banks)

**FFV (TOMATO, ONIONS,…)

CASSAVA

Captive Off-Grid Energy Services

COES

*Land is organized in iPAID Land Banks and in GeoCoops @0.5ha per smallholder farmer (SHF) (targeting 16,000 Geo-Coops and 8 million SHFs))

VALUE ADDED PROCESSING NIRSAL’s Inclusive Private Agribusiness Investment Development (iPAID)

NIRSAL’s M2M value chain integration approach provides sustainable value for Financiers, Investors and Agricultural Value Chain Actors

16

• Appropriate mix of funding

mechanisms for different actors

• Central account domiciliation

for multiple agricultural value chain actors

• Demand and supply

transactions locked in amongst value chain actors

• Virtual financial transactions

within an integrated ecosystem for payments and settlements

• Near-Zero Cash Movements
• Financier Visibility and control
• ver financial flows

Pre-Upstream Finance Upstream Finance Midstream Finance Downstream Finance FINANCIER/ INVESTOR

Layered on NIRSAL CRG

Conclusion Section 3

17

Systematic collaborations between agriculture and agriculture finance are required for the realization of the agricultural fortunes of Nigeria

The optimization

• f Agricultural

Value Chains (AVCs),... …and the development and implementation of bespoke agriculture financing solutions by Financiers… …within the Framework of NIRSAL’s de- risking tools and approaches… …guarantee maximum Returns on Investment for both AVC actors and Financiers

Financiers and Investors should take advantage

• f the sectoral
• pportunities and

NIRSAL’s agriculture de- risking value offerings.

18

• USD500.7million Loans

Guaranteed

• 677 Projects

Guaranteed

• USD4.2million Interest

Draw Back paid to 266 Obligors

• Developed and

launched the Area Yield Index Insurance product and protected up to USD21.2million revenues

• f 29,229 farmers over

27,831 hectares of land with USD0.4million paid

• ut in compensation to

farmers

• Developed Curriculum and

Trained 184 Middle Management and Agric. Desk Officers of commercial banks.

• Provided GAP training to

700,000 farmers and 74 Extension Workers Risk Sharing Fund Insurance Technical Assistance Investment attracted/ Loans guaranteed

USD500.7million

Direct Employment Created:

400,000+

Lives Impacted:

2,000,000+

Some of NIRSAL’s Results to date

Guidance on the establishment of Risk Sharing Facility (RSF) models for African Countries under the aegis

• f the African

Development Bank (AfDB). Recently concluded the set up of MIFA in Togo. Rest of Africa Engagement

19

Financial Institutions

NIRSAL

Increase financing to Nigerian agriculture and agribusiness leveraging NIRSAL’s risk management tools

De-risking agriculture and facilitating agribusinesses

Understand the agribusiness terrain in Nigeria through NIRSAL and localize available technologies to fit the Nigerian environment

CANADIAN COMPANIES Canadian/Nigerian Governments

Creation of enabling environment for agribusiness and agriculture finance actors; Stimulate innovative financing initiatives e.g. blended finance

Other Risk Management Actors

Collaborate with NIRSAL for the de-risking of agriculture and development of agribusiness in Nigeria

Call to Action

Thank you

Plot 1581 Tigris Crescent, Maitama District, Abuja 900221, FCT, Nigeria www.nirsal.com info@nirsal.com nirsalconnect

21