Nigeria looks to food exports to boost FX income after oil shock

LAGOS (Capital Markets in Africa) – Nigeria is looking to boost agricultural exports to earn more hard currency, and aims to cut imports of rice and wheat which together cost it almost $4 billion a year, Agriculture Minister Audu Ogbeh told Reuters.

Nigeria emerged from recession in the second quarter as oil revenues rose, but growth was sluggish. The government has touted agriculture as a way to wean the country off its oil dependence, improving access to finance and introducing policies to try to encourage private investment.

In a sign of progress, Ogbe said Africa’s most populous nation would be self-sufficient in unmilled rice this year, though milling capacity was constraining output which he expected would be increased by April next year.

He said Nigeria needed 12 million tons of unmilled rice to achieve eight million tonnes of milled rice to meet local demand, and the country’s production was approaching 20 million tonnes of unmilled rice this year.

Unmilled rice production was 7.85 million tonnes in 2016 and was just 4.54 million in 2010, government figures show.

“We redesigned the agricultural programme … clearly saying that we are looking for an alternative to oil and gas,” Ogbe said in an interview in Abuja.

“The simple thing in diversifying the economy (is) to increase local production of staples and substitute for imports – top of which is rice and wheat,” he said, adding the rice policy would save Nigeria $1.6 billion a year.

Ogbe said a similar policy had worked with sorghum and now the country was able to meet local demand, especially for the beer industry, substituting for barley imports.

On wheat, he said the plan was to cut imports by 2019 as current output of 300,000 tonnes grows thanks to better seed.

Ogbe said the government was aware that crude oil demand would probably decline over the next 10 years and had made a call to boost agriculture, which contributes around 40 percent to its gross output and is growing.

Higher Prices
Africa’s biggest economy earned $12.9 billion in non-oil revenues in 2013. Ogbe expects agriculture will generate around $40 billion in five years’ time, nearly the same as the country earns from crude exports, as it looks to boost sales of cocoa, cashew, livestock, coconut oil, sesame seed, cassava.

He said the country had started to export yams and was seeing demand for fruits and livestock such as bananas, mangoes, goat meat and soybeans from Britain, United States, Russia, the Middle East and China.

Ogbe said a devaluation of Nigeria’s naira currency last year made agricultural commodities cheaper for neighboring countries, to the extent that the likes of Burkina Faso, Senegal, Ghana, Togo, Niger and Chad started to buy food from its local markets, a move which stoked food price inflation.

“We literally had an invasion from West Africa. It became cheaper to buy food here. They’re shopping here. Everyday trucks leave big markets especially in the north and south west loading food,” Ogbe said

However, prices have started coming down, he said, adding the government was looking at ways to formalize trade with neighboring nations to boost revenues and foreign exchange.

Core inflation in Nigeria has declined for eight consecutive months, though food price inflation has remained above 20 percent, government data showed on Tuesday.

Source: Reuters Africa News