Economic Hardship: AfDB Plans $2.7bn Budget, Agric Loans For Nigeria
…approves $134m fund for emergency food production
The African Development Bank Board of Directors has approved $134m for Nigeria to implement an emergency food production plan, AfDB President Akinwumi Adesina has said.
According to him, talks are also ongoing for a $1.7bn economic and budget support loan as well as the launch of a $1bn agro-industrial processes in 28 states.
Adesina made the disclosures during an interview with journalists in Lagos on Monday.
The development came amid a biting food shortage that has led to hunger protests in Nigerian states and most recently attacks on grain warehouses in Abuja, Ogun, Niger and Kaduna states.
Last June’s fuel subsidy removal and exchange rate unification policy of the government have led to severe hardships with inflation now nearing 30 per cent amid a sharp depreciation of the naira.
Weak consumer purchasing power has affected businesses with the nation recording weak Gross Domestic Growth during the last quarter of the last year.
However, Adesina told journalists in Lagos that AfDB had pledged to support Nigeria through this period, disclosing that a number of agric initiatives should yield about five million metric tons of wheat, rice, cassava, maize this year for the country.
He exuded confidence that the development bank would work with Nigerian government to proffer solutions to the problems confronting Africa’s biggest economy.
He said, “I’m not used to complaining; I’m used to finding solutions. I did tell the President when I can last year that we would strongly support the Nigerian government in finding a solution to the challenges. As I speak to you today, we have approved $134m for Nigeria to implement an emergency food production plan. And that is not something that we are planning to do; it is what we are already doing.
“We have supported the cultivation of 118,000 hectares of wheat in Nigeria already this season. We will do 150, 000 hectares of maize production this march. By the rainy season, in May and June, we will support Nigeria to do 300,000 hectares of rice. We will also do 300,000 hectares of maize, 150,000 hectares of cassava and 50,000 hectares of soybean. So, that means that by the end of March, Nigeria would get out an additional one million metric tons of wheat; and by November, we will have an additional four million metric tons of rice, cassava, maize and soybeans.”
The AfDB chief however advised Nigeria to push for more food supply, pointing out that food inflation is a major component of the nation’s inflation figure.
Tackling inflation requires looking at some of the structural drivers, according to him.
“A big part of that (Nigeria’s) inflation is food price inflation. If you look at the Consumer Price Index, probably 65 per cent of it If not even 75 per cent of it now, is actually the price of food. And so, you don’t necessarily deal with food price inflation through your standard macroeconomic policy of tightening monetary supply. You deal with it by producing the food because that’s the thing that needs to be done. So I think it’s very important to be able to deal with that,”
He emphasised the need to enhance food production in the country.
On how the country could boost food production as quickly as possible, Adesina said, “But one thing that I would say is that the government needs to go back to the policy of electronic wallet system. Remember when I was minister, we did design a programme to get seeds and fertilizers to farmers directly via their mobile phones by electronic vouchers. We were able to reach 15 million farmers in four years; the whole place was booming with food. And I think that is what I will advise needs to be done and done very quickly. Because access to high performing yields, high performing seeds and fertilizers and farm inputs is very critical; otherwise you will not be able to do it.”
Nonetheless, Adesina also pointed out the need for Nigeria to get low-interest concessionary financing to overcome its economic challenges.
The development bank boss said issues around the exchange rate must be dealt with as an import dependent nation.
According to him, the AfDB is planning about $1.7bn economic and budget support loan for the country.
He said, “There needs to be a lot of support around Nigeria, given the tight fiscal space and the lack of forex, to make available a lot more concessional financing to the Nigerian economy. And that’s what we’re doing at African Development Bank. This year we expect to approve with our board because we always go to our board of directors for approval, but our plan is to be able to do $1.67bn of financing to Nigeria in different sectors, including considering a potential policy base operation of budget support to Nigeria. We are discussing with the Minister of Finance; that is part of a $1bn budget support operation that will go into two tranches. Again, I will say it has to be approved by the board, but these are all the things that we are hoping to be able to do.”
He spoke about other agric projects in the country.
Also, the AfDB is planning to launch this year a programme for a $1bn special agro-industrial processes are in 28 states, adding that “It this structural interventions that I will say would make agriculture more productive, efficient, and competitive.”
“So those are the things that we are doing in Nigeria. In addition to that, we have a programme that we’ve already implemented, called Special Agro Industrial Processing zones. So these are new economic zones we are supporting Nigeria to develop. We provided $520m for that, ourselves, the African Development Bank, the Islamic Development Bank, and the International Fund for Agricultural, currently working now in eight states. We expect that those things will start hitting the ground and start construction by June of this year,” he added.
