Shittu Ibrahim ekes out a living for his two wives and
11 children by selling tomatoes he grows to
passersby along a highway that runs through the
Kadawa Valley near Kano, the biggest city in northern
Nigeria. With no way to find new customers, about
two-thirds of his crop rots.
Now the country’s central bank and Africa’s richest
man, Aliko Dangote, have teamed up to establish a $
25 million tomato-paste factory that could boost
income for Ibrahim and the 8,000 farmers who live in
the valley.
“We are doing this only to feed, as you can see, I
can’t afford the luxuries of life,” the stocky 56-year-
old said as he sat on a stool on June 6 outside his
mud-walled house, which is surrounded by tomato
fields as far as the eye can see. “There are better
prospects in supplying Dangote because people will
buy from them from all over the country. We hope
that things will improve.”
The intervention by the Central Bank of Nigeria,
which commissioned a study to show that processing
local tomatoes is cheaper than importing paste from
China, is part of the government’s drive to cut annual
food imports of more than $10 billion. It also plans to
boost agriculture in a country that was food self-
sufficient in the 1960s, and create jobs in the north
where poverty and unemployment have fueled an
Islamist insurgency.
“We want to take Kadawa as a model and prove that
with the right application of government policy we
could get finance to the sector, improve productivity,
create jobs and raise income,” Central Bank of
Nigeria Governor Lamido Sanusi said in a June 25 e-
mailed response to questions.
Spicy Kebabs
The 2011 study showed that Nigeria, Africa’s most
populous nation, pays $360 million to import more
than 300,000 metric tons annually of tomato paste
from companies including Hebei, China-based
Baoding Sanyuan Food Packing Co. and Singapore’s
Olam International Ltd (OLAM). a year. The country
produces 1.5 million tons of tomatoes annually of
which about 900,000 tons rot, Agriculture Minister
Akinwunmi Adesina said at a June 13 presentation in
the capital, Abuja.
Annual consumption is about 900,000 tons.
Tomatoes feature in popular Nigerian dishes like
Suya, a spicy northern delicacy of meat kebabs with
raw tomatoes, as well as a tomato stew eaten with
rice, beans, yams and cassava dough.
Dansa Holdings Ltd., a unit of Dangote Group, the
company that accounts for the bulk of Aliko
Dangote’s $19.9 billion wealth, took up the project
after a a failed attempt to get importers including
Olam, Conserveria Africana Ltd. and Chi Group Ltd. to
form a venture. The plant is expected to start by
November and will produce more than 400,000 tons
of tomato paste annually. Most of its tomatoes will
come from farmers in Kadawa Valley.
Reaping Rewards
Farmers will receive a guaranteed price of about $
700 per ton compared to an average of less than $
350 now, the central bank said.
Dangote, the world’s 32nd richest man according to
the Bloomberg Billionaires Index, owns businesses
including flour mills, fruit canning plants and palm oil
refineries. He also owns cement, salt and oil assets.
He was born in Kano.
“It’s a win-win situation. We have a price we can
compete with and the farmer has a price that makes
the tomato a good value,” said Sani Dangote, vice
president of Dangote Group and a brother of Aliko
Dangote, in a June 18 interview in Abuja. “It’s only
agriculture that can take poverty away overnight
because it doesn’t take long for the farmer to see the
results and reap the rewards.”
While agriculture accounts for more than 40 percent
of the economy of Africa’s biggest oil producer, most
output is by subsistence farmers who eat much of
what they grow.
‘Create Wealth’
Gross domestic product per capita is $1,436 in the
south and $718 in the north, according to Lagos-
based Financial Derivatives Co.
Nigeria is now the world’s second-largest importer of
rice and sub-Saharan Africa’s biggest wheat and
sugar buyer.
Farmers in northern Nigeria once grew cotton,
peanuts, cowpeas and rice for export. Half of
Nigeria’s 160 million people dwell in rural areas and
four-fifths of those live on less than a dollar a day,
according to the United Nations’ International Fund
for Agricultural Development.
Nigeria attracted agricultural investment worth more
than $8 billion in the past 18 months, Adesina said.
Still, only 40 percent of its 21 million hectares (51.9
million acres) of arable land is cultivated.
“Our strategy is to change the face of the north,”
Adesina said. “We’re using agriculture for poverty
reduction; our intention is to create wealth.”
Credit Guarantees
Key to the government’s plan to end rice imports,
now costing 1 billion naira ($6.2 million) a day, by
2015 and expand crop exports, is a central bank plan
to channel credit to agriculture.
The Nigeria Incentive-Based Risk-Sharing System for
Agricultural Lending, or Nirsal, a unit of the Central
Bank of Nigeria, which carried out the tomato study,
also provides credit guarantees to enable banks to
lend to farmers, Jude Uzonwanne, its head and a
former consultant at Boston-based Monitor Group,
said in an interview in Abuja.
At Kadawa, Nirsal determined that “about 8,000
farmers producing in about 5,000 hectares needed
roughly 4 billion naira in working capital,” he said. It
also established a farm office of agronomists and
managers “to run all the middle mechanics between
growing crops and delivering to the Dangote
factory.”
Cassava Chips
Nirsal has the mandate to guarantee as much as 75
percent of loans to agriculture. Since giving its first
cover for a loan by Sterling Bank in July last year, it
has gone on to work with most lenders in Nigeria,
according to Uzonwanne. By April, it had issued
guarantees for loans worth 25 billion naira, covering
an average of 57 percent of lending, he said.
Apart from tomatoes, Nirsal has provided similar
guarantees for producers of cassava chips, rice,
soybeans, cocoa and leather.
Loans to agriculture as a share of total credit rose to
3.8 percent in February from 1.5 percent in
December 2009, according to figures released by the
Bankers’ Committee. The central bank has set a
target of 10 percent of all loans to agriculture by
2016.
Dansa expects to produce enough tomato paste for
both the local market and export, Sani Dangote said.
Chinese exporters to Nigeria have responded.
“We’ve seen prices prices from China drop 30
percent in the light of our plan,” he said. “Everyone
in the tomato world is aware of our project.”
For Ibrahim these developments mark a turn of
fortune.
“Before the price of tomatoes would keep going down
because all the farmers sell at the same time,” he
said. “With the coming of the Dangote factory, prices
won’t go down that way any more. We can be sure of
a stable income.”
[Bloomberg]
C

With very little noise this administration is creating so much opportunities, they are achieving so much at a pace they don't even have time to stop and gloat about it, I wold even have know of this, if not for Bloomberg !

what achievement, they did not achieve anything in agriculture.. I dont know where Bloomberg get that information. They did not do well. Price of food is at all time high.

Food is so expensive in Nigeria.. that I wonder where they get the money to pay for it. I pity nigerian.. things are very expensive mostly food... so expensive..

@Oga Musiwa I agree with u but this article is reporting the govt's attempts to redress this faults..to reduce wheat import with cassava flour production which is actually working and also replace imported substandard tomato paste with locally processed tomato paste thus addressing the agricultural connundrum while creating jobs..kudos to Dr akinwunmi adesina,I consider him GEJ's best performing minister

musiwa28: what achievement, they did not achieve anything in agriculture.. I dont know where Bloomberg get that information. They did not do well. Price of food is at all time high.

Food is so expensive in Nigeria.. that I wonder where they get the money to pay for it. I pity nigerian.. things are very expensive mostly food... so expensive..

I cant say I know what your expectations are, but improvement is a gradual process, I really dont know what you expected to happen in 2 years...but it cannot immidiately wipe away the in-actions of several previous years!