The Nigerian Commodity Exchange (NCX) has not witnessed any trade in ten years, prior to a 2018 report on ‘ Commodities trading ecosystem in Nigeria’ by the Securities and Exchange Commission (SEC). Out of the two commodity exchanges in Nigeria, AFEX commodity exchange as noted by SEC is fully operational while NCX is not fully operational due to funding challenges occasioned by government’s inaction, amidst several other challenges.
Access to market is a major challenge in Nigeria’s agricultural sector, with primary producers often on the losing end. Even when access to finance is given as a challenge of farmers, the fact has remained; no matter how much credit is extended to any farmer, if they are unable to access markets (and profitably too), then they will default.
“Money does not matter if you can’t sell,” remarked Ayodeji Balogun, country manager for AFEX Commodities Exchange Limited and the regional director of Africa Exchange Holdings during a panel discussion at the 2019 Businessday Agribusiness and Food Security Summit.
The dearth of a robust commodity exchange system in Nigeria currently accounts for the significant portion of uncertainties in commodity marketing from producers to end users which includes multinational manufacturing companies and even individuals, as an unstructured market implies adequate planning cannot be done, particularly for futuristic (and investment) purposes.
As agricultural value chain and commerce experts have said, a private sector driven commodity exchange system is expected to eliminate many problems in the sector, where post-harvest losses are as high as 40 per cent for some commodities. It also frequently experiences gluts in the market for different commodities, leading to price instability, and in cases when prices crash, there is very little income for farmers. Invariably, it is discouraging for potential investors who do not consider the Nigerian sphere viable enough on account of its volatility and uncertainties.
A commodity exchange system brings transparency in prices, ability to plan, capacity to borrow more easily from financial institutions and ability to provide farming production estimates.
“That is the only way the farmer will get value for his or her produce. A commodity exchange is the vehicle that the farmer needs to get real value for his or her produce,” Kabriru Ibrahim, president, All Farmers Association of Nigeria (AFAN) previously told Businessday in a phone interview.
According to Frans Ojielu, global financial advisor, ICMG Commodities in an emailed note, the six Commodity Boards of Cocoa, Groundnut, Cotton, Palm Produce, Rubber and Grains were a great innovation in ensuring product quality, price stability and development of the production areas before they were scrapped in the 1980’s in the wake of trade liberalization and some inefficiencies in the Boards.
“With the renewed focus on agricultural production, marketing support is inevitable to reduce post harvest losses (sometimes up to 40 percent), provide markets and liquidity to farmers, assist in quality enforcement and stimulate agricultural production and processing. These marketing support companies will ramp up production, increase export and generate employment,” Ojielu wrote.
The Economic Growth and Recovery Plan (EGRP) states the government’s intention to re-vitalise the Nigerian Commodity Exchange (NCX) to fast-track exports, improve inventory management and storage capacity at the national level.
However, experts express the view that more private sector driven commodity exchange companies/systems are required to meet the demands of a more than 190 million population, which also substantially feeds into the West and Sub-saharan Africa markets. Boosting agricultural capacity through commodity exchanges in the country will also see the sector’s contribution to GDP increasing in tandem with increased productivity.
Bello Abubakar, president, Maize Association of Nigeria, had also told Businessday by phone, that “It is good commodity exchange is driven by the private sector; sorry to say but it is the government that is causing the problem.”
Emmanuel Ijewere, vice president of the Nigerian Agribusiness Group ( NABG) also expressed the view that “Commodity exchange is a private sector business, the reason why Nigerian stock exchange market has survived is because it is not run by the government. Yet it is regulated by the government ( security and exchange commission). In the same manner, government can put in place a regulatory body and let people set up commodity exchanges.”
A notable example in Africa is the Ethiopia Commodity Exchange (ECX) which has been described as one of the driving factors of improvements in the country’s agricultural markets. The ECX is set up as a private company owned by a partnership of the markets actors, members of the exchange and the Ethiopian government.
In the same vein, Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI), also told Businessday that setting up a commodity exchange system in Nigeria “should be private sector driven but the government may have to support the development of the structure.”
“And I think we should go and copy the models that are already working, such as Ethiopia. For most of these things, when going into a new terrain such as commodity exchange, best thing is to look at existing models working elsewhere in Africa and replicate same here, but government should have its own input because we are talking about agriculture” Yusuf said.
Abubakar believes a fully structured commodity exchange system will make an impact “because we will have a centre where our commodities will be centralized or commercialized. The prices will be determined by the stakeholders; from the buyers and sellers side. There will be controlled (market-driven) pricing and all other companies or processors of the board will be represented.”
Ojielu also noted that the involvement of the private sector in the commodity exchange will lead to the accentuation of the value chain of production, processing, marketing and establishment of businesses that will make agribusiness business attractive to the teeming young, educated and energetic population in the country.
Obasanjo is horrible for approving dumb law. The person who added this foolishness to the constitution is worse. If the land use act was repealed farmers would have a much easier time securing capital because the land is collateral. It would also make real estate development easier since the middle man is cut out. Nigeria might see more economic growth afterwards.
“Since formal land registration commenced in the country over 100 years ago, less than 3% of land nationwide has been registered.” 3%!
This is pretty insane to know 97% of the land is dead capital. Individuals should own land and all minerals associated with it. It's should be kept in trust by the state. Any issues of development can be solved with eminent domain laws.
In 1978, The Military Government of Nigeria passed the Land Use Act that abolished all freehold land in Nigeria. The actual text is below:
“An Act to Vest all Land compromised in the territory of each State (except land vested in the Federal government or its agencies) solely in the Governor of the State, who would hold such Land in trust for the people and would henceforth be responsible for allocation of land in all urban areas to individuals resident in the State and to organizations for residential, agriculture, commercial and other purposes while similar powers will with respect to non-urban areas are conferred on Local Governments.”
(27th March 1978)
The Land Use Act (LUA) nationalizes all lands in Nigeria and places a government official between a legal contract of sale of land between two parties. It places all land in Nigeria in “trust” of the Government and specifies that future transfers or sale of land must be confirmed by a government official, in writing, irrespective of the value of the transaction. To be specific, the Land Use Act says…
“It shall not be lawful for any customary right of occupancy or any part thereof to be alienated by assignment, mortgage, transfer of possession, sublease or otherwise howsoever –
(a) Without the consent of the Governor in cases where the property is to be sold by or under the order of any court under the provisions of the applicable Sheriffs and Civil Process Law; or
(b) in other cases without the approval of the appropriate Local Government.”
The negative effect of the LUA is that it transfers rights to title of land from individuals and communities to the Government which approves ownership and subsequent transfer of such land, in writing.
For example, Section 22 of the LUA prohibits any person to whom the Governor has granted a statutory right of occupancy from assigning, mortgaging, transferring, subleasing or howsoever adversely dealing with the land against the terms of grant, without having first had and obtained the consent of the Governor. What this clause means is that equitable mortgages cannot be created and enforced without a sign off by the Government.
The Pension Commission has issued draft guidelines that allow contributors to allocate 25% of their Retirement Saving Accounts as deposit to Deposit Money Bank/Developers. Under the LUA, each transaction will need to be signed off by the Governor, to approve land for the developers. What happens when there is a delay or denial from the Executive mansion? Also, should those RSA holders seek to mortgage their titled property as collateral to obtain loans, they will need to get their assignment signed off by the Government. This makes Home Equity Line of Credit as a financing option very expensive in Nigeria. Consider that if a client wanted to buy or sell a Government Bond or an oil refinery, the transaction would involve both private parties’ legal teams, but crucially, it would not need the consent or accent of any government official before the sale is approved.
The LUA was intended to standardize the administration of land across Nigeria, and remove bottlenecks and high costs associated with land. The Government felt that land could not be easily acquired, for instance by investors to say engage in large scale agriculture, as they would have to buy land from various families and communities. However the LUA has not made land approvals and registrations as equitable as promised, in 2014, the Chairman, Presidential Technical Committee on Land Reform (PTCLR), Prof. Peter Adeniyi, said: “Since formal land registration commenced in the country over 100 years ago, less than 3% of land nationwide has been registered.” 3%!
The LUA leads to transaction bottlenecks, is cumbersome, tiresome and creates “negative wealth” as all land without C of O cannot be brought into any formal transaction.
Another contentious issue is the changingof the legal status of the Nigerian land “user” from ownership to that of statutory occupancy. In effect, no Nigerian owns any land, we simply have a statutory right to use it. This limits the rights of the “user” i.e., your proprietary interests are extinguished.
The argument against repeal of the LUA will rest with the issues government has in securing land from private citizens for the greater public good e.g., building a road over private land. These concerns can be addressed by passing a bill to give the Federal and State Government the power to acquire land under the Right of Eminent Domain, i.e. the superior dominion of the sovereign over individual property rights. The Land Use is, in fact, a universal application of this Eminent Domain right.
The repeal of the Land Use Act will immediately give millions of Nigerians “equity”. They can own, transfer and/or sell the land they live on, put up that land as collateral, bring the land into the formal marketplace and make property transactions easier to finance via financial institutions. The repeal of the LUA will boost Nigeria’s mortgage market. It will create jobs as realtors, surveyors, estate agents, and builders will have more opportunities and more property to bring into the market.
Most importantly, the repeal of the Act will instantly empower rural landholders, eliminate “dead capital” (Capital tied up in land without title) and open agricultural land otherwise “locked” up in administrative red tape in the Local Governments. Farmers can negotiate directly with the local community for sale or lease of hectares of arable land to grow food, considering that 70% of Nigeria’s labour is agriculturally based. The bottleneck of ownership of land, if removed, will instantly increase the acreage of land available to agriculture.
It’s a similar story on many Nigerian farms, leaving the average yield per hectare at just over 2 tonnes - half the global average and a fraction of Egypt’s 9.5 tonnes a hectare, according to U.N. data.
The lack of mechanization adversely effects agricultural industry productivity. Nigeria is only half as productive per hectare as India. According to PWC estimates Nigeria could double the productivity. Nigeria can copy India's farm Mechanization policy.
In India, custom hiring was a key initiative that accelerated the adoption of mechanisation among small-holders farmers. This approach facilitated the rental of appropriate machines for a specified period of time, usually accompanied with an operator. It enabled farmers access required machinery without purchasing it.
MAKURDI, Nigeria (Reuters) - Thomas Tyavwva Maji is planting rice on more of his land in Nigeria’s Benue State than ever to take advantage of a surge in prices since the country shut its land borders in August.But he says he cannot go much further. With no machinery or irrigation, limited manual labor and no spare cash for fertilizers, the 45-year-old is not expecting any dramatic change in his fortunes.
“We work until we get exhausted, manually we get exhausted,” said Maji, as a woman nearby beat hand-harvested stalks on the ground to separate the grains from the chaff.
The constraints Maji faces have bedeviled many rice farmers and millers across Nigeria for years. Despite government measures designed to spur production, farmers in Nigeria get far less from their land than other major rice growers and the West African country is only marginally less reliant on imports.
That’s a problem for a government that wants to grow all of its own food and boost the country’s agriculture, a sector that accounts for nearly a third of gross domestic product in Africa’s biggest economy.
When he came to power in 2015, Nigerian President Muhammadu Buhari pledged to help the nation become self-sufficient in rice – once a luxury but now a staple for millions of Nigerians.
In 2015, Nigeria’s central bank banned the use of its foreign exchange to pay for rice imports and has backed loans of at least 40 billion naira ($130 million) to help small-holders boost output. It also banned rice imports across land borders and kept hefty 70% tariffs on imports coming through ports.
In August last year, Nigeria went a step further and closed its land borders altogether to stamp out smuggling, often from neighboring Benin, with rice being one of the main targets.
Buhari’s spokesman, Garba Shehu, said the measures boosted rice production to 9.2 million tonnes last year from 7.2 million in 2015, making Nigeria more or less self-sufficient, though traders can import rice through ports if they pay the tariffs.
Agricultural data specialist Gro Intelligence, however, put Nigeria’s rice output at 4.9 million tonnes in 2019, up 60% from 2013 but well below local consumption of 7 million tonnes.
The U.S. Department of Agriculture, meanwhile, expects Nigeria’s 2020 rice imports to rise 9% to 2.4 million tonnes, in part due to the high cost of unprocessed Nigerian paddy rice and elevated operating costs at mills.
In Lagos, Nigeria’s biggest city, supermarket shelves remain stocked with a plethora of imported rice brands.
In the markets where most Nigerians buy their food, sacks of Nigerian rice are piled high but imported rice is still available, even though some traders keep the foreign grain under wraps to prevent it being confiscated by customs agents.
LOW YIELDS
Small-scale farmers such as Maji account for 80% of Nigeria’s rice production with a handful of large companies, such as Coscharis Group, Dangote and Olam, growing the rest, according to the U.N.’s Food and Agriculture Organization (FAO).
In Benue state, virtually every aspect of Maji’s farming manual, from planting to harvesting to leveling out roads to take the crop to market.
It’s a similar story on many Nigerian farms, leaving the average yield per hectare at just over 2 tonnes - half the global average and a fraction of Egypt’s 9.5 tonnes a hectare, according to U.N. data.
Experts say there is little hope of improvement without significant investment in irrigation, mechanization, roads and storage. More than 12% of rice is also wasted due to poor roads and inefficient harvesting, milling and storage, consultants KPMG said in a review of the Nigeria’s rice industry.
In a good year, Maji makes about 1.5 million naira ($4,900) – nowhere close to the 5 million, at least, a tractor would cost. Without irrigation, a goal so remote he doesn’t even know the cost, he can only plant one crop a year.
“At this scale, we will not even be able to fetch a tractor. Talk less of fertilizer and other chemicals,” Maji said.
According to the FAO, less than 1% of Nigeria’s farmland is irrigated, compared with a global average of more than 20%.
Small- and medium-scale rice millers, who account for more than 80 percent of the local market, also say they’re struggling to meet increased demand without proper equipment.
At Wurukum Rice Mill in Makurdi, Iveren Asan works alongside her sister, using a loud diesel-powered generator to drive machinery processing paddy grains into consumable rice.
Nearby, rice grains that have been parboiled in vats heated by firewood dry on tarps. She said new buyers from across the country had surfaced since the border closures - but producing more would require significant investment in new machines and the higher prices were not enough on their own.
“We can’t meet the demand. We are doing the process manually, so we cannot meet the demand,” she said.
‘INCREDIBLY DISRUPTIVE’
More broadly, experts warned that extreme measures, such as border closures, taken in the name of food security were hurting Nigerians, stunting the development of other industries and holding back foreign investment.
“The border closure has been incredibly disruptive,” said John Ashbourne, an economist at Capital Economics. “It stops industries from getting the imports they need, and it pushes up prices.”
The border closure is set for review Jan. 31 but the presidency’s Shehu said land frontiers would remain shut until Nigeria’s neighbors stopped smuggling on their side - and there was “no sign of compliance yet”.
Ashbourne said even some farming has taken a hit from government policies.
After glass was added to a central bank list of items importers cannot buy with foreign exchange, some tomato paste plants shut because they couldn’t source the jars they needed.
On another farm in Benue State, Abraham Hon, 51, weaves through rows of melons and corn before reaching his rice, the crop that generates the most money.
“The prices look pretty good,” he said, as men cut stalks of rice by hand and laid them in piles on the ground. “We expect more money in the pocket this year.”
But while he and Asan are happy with their increased income, they worry about the impact of higher prices on consumers.
A 50 kg bag of rice can cost as much as 24,000 naira in Lagos - nearly double the price in July before the borders were shut and not far below the monthly minimum wage of 30,000 naira.
And consumers, who already spend more than half their income on food according to the World Bank, are feeling the squeeze.
“We will reach a point where people who are buying rice can’t afford to buy rice. They will look at other alternatives to get energy and get food on their table,” Hon said.
“That in the long term is not in the interest of we, the farmers.”
Malami said the outfit is not backed by any law, whether federal or state, so it cannot be regarded as a legal organisation.
The ultimate solutions is to amend the constitution to allow any tier of government to have their own police force and prisons. It also be smart to amend exclusive list item 2 and 1990 fire arms act. Stop the half measures and just do the hard work.
urahara: Blue3k, a question I would like to ask is that what happened to all the money the cbn has been giving out as loans to rice farms.
Why are the initiatives by the govt still yet to bear fruit ?
The policy didnt bear fruit because the core issues Mechanization hasn't been addressed. Nigerian rice production grew mainly vecause more land is dedicated to cultivation the CBN is recovering it's loans. I still need to file a FOIA request to get the exact details of whats percentage of the loans went into default.
It seems the border closure isn't helping rice production like I believed. The productivity problem has to be addressed before Nigeria becomes sufficient in rice. Nigeria's rice imports are set to grow this year.
Agricultural data specialist Gro Intelligence, however, put Nigeria’s rice output at 4.9 million tonnes in 2019, up 60% from 2013 but well below local consumption of 7 million tonnes.
The U.S. Department of Agriculture, meanwhile, expects Nigeria’s 2020 rice imports to rise 9% to 2.4 million tonnes, in part due to the high cost of unprocessed Nigerian paddy rice and elevated operating costs at mills.
According to the FAO, less than 1% of Nigeria’s farmland is irrigated, compared with a global average of more than 20%.
Experts say there is little hope of improvement without significant investment in irrigation, mechanization, roads and storage. More than 12% of rice is also wasted due to poor roads and inefficient harvesting, milling and storage, consultants KPMG said in a review of the Nigeria’s rice industry.
Kaycee7: Watched the first 7 episodes. Decided to wait for them to finish the first season so I can binge. Loving the show, because of Askeladd sha. Thorfinn has been annoying so far.
No Spoilers please
The first season is complete binge away the show gets even better.
Akpabio's refusal to resign his position as Minister thereby participating fully in the rerun means that he has destroyed all the chances the APC has in the Akwa Ibom State. By 2023,
They didn't have much of chance in hindsight. APC should focus it's efforts on cross river instead. They dont have a strong candidate to run against.
Can someone explain the benefit of decamping to me. I dont see why they should if they won their elections. They can always work with the governor even being in different parties. Any political gridlock should be minor depending on the issue. Shouldn't they be affraid when re-elections come up knowing they turned their backs on their constituents.
Lagos state government has every right to regulate traffic laws. I dont understand the victimhood complex and paranoia that makes you believe they're after you. You're not special.
Mynd44: This does not explain the issues with the state with the longest coastline.
If both Ondo and Akwa Ibom are measured with the same standards say 100km, one will come up longer (whichever state that is). But this contentions is more political than actually scientific
Do you know how measured their coastline? Changing the units will change the answer even measuring the same costline. There's no political gain to be had over having the biggest coastline since nobody cares. All that matters is where your borders start and stop.
Rosskii: You are clearly an economic illiterate. When the main source of meat is removed, the alternatives will become scarcer and more expensive. That is basic Economics 101.
And YES we will pay MORE than 5 times more for beef if we had to import it.
Do you think foreign beef exporters are paid in Naira? Where do yo get this idea that increased Nigerian demand would make foreign beef prices fall? Increased demand leads to higher prices until equilibrium is reached between demand and supply.
Please, go and study market economics and international commodity pricing before posting anything further.
Lol you're you're a basket case. If the import ban is removed and they go on strike it evens out. Nothing major will happen because alternative exist. Lol you're insane if you believe that beef will 5 times more expensive. You dont have any evidence to back such a dumb claim up. The price of imported fish, wheat or commodity isn't 5 times more expensive than locally produced ones. You cant name any agricultural good that is.
Increased Nigerian demand wont have significant effect on world beef prices. Increased supplies coming from all over the world will make beef more expensive. In your mind an imported catfish is 5 times more than a locally produced one. Lol you're wailing is dumb.
Rosskii: Your point is actually against any 'Fulani strike', as the low meat consumption means the situation will get TERRIBLE for our meat consumption if the supplies are further reduced.
You have a strange logic that says ''you have little food anyway, so it won't hurt you much if we take away the little you have''.
Weird indeed.
Oh, and lifting the ''beef import ban'', to replace local beef simply means you'll pay a minimum 5 times more for beef than you currently do.
Good luck paying for your shaki and pomo in dollars!
No the point is your wailing is stupid. There's alternatives sources of meat like everyone with common sense pointed out. Nigerian meat consumption wont charge especially since you're allowed to import them live anyway. Then there's option to eat more fish.
Lol it's funny how you come up dumb imaginary figures. Nobody going to pay 5 times more for beef. The price of beef world drop steadly with increased supplies actually. Beef commodity prices change significantly because Nigerian demand worldwide. Dont you know people already buy fish, wheat and other commodities in dollars why are you worried?
It's crazy how much trouble Nigerians go through over meat they hardly eat per capita. Nigerians eat less beef and meat even compared some of their African counter parts and can't even boast of having large beef exports. Lol the stats are abysmal if you looked at milk production in Nigeria. You wonder why these guys feel the need to beat their chest.
There's a reason they and need government protectionism. If they want to see how little they matter tell Buhari to lift the beef import ban.
Lol the south is their main market. They dont come down south for the exercise. People can essily replace beef with chicken, pork, fish and probably goat meat.
If Beef import bans were lifted who would even bother with them? I'd happily take USDA beef from the Americans. Nigerians gladly import fish without issues.
seunmsg: I must also state that the AGF doesn’t have the power to issue directive to the governor on the matter. At best, he can offer his legal opinion on the matter and nothing else. The right thing is for the lawfully elected council members to institute legal action against the governor.
The AGF isnt overstepping his bounds in my opinion. He has the power to prosecute the case if he chooses to because they're brraking federal law. He already cited the constitution and referenced supreme court cases on the matter.
These governors are power drunk. I never understand why so many states elect these dumb state assembly members who cant reign them in. They have the power to regulate state electoral commission.
Firefox01: The sweetest thing is that as a result of NFIU, caretaker chairmen have no access to LG funds. They've been borrowing to sustain themselves.
There's a bank be foolish enough to lend them money? Buhari did well I just wish there would be a constitutional amendment eliminating state local joint account outright. The next president could return things to status quo.
But if Ondo state has the longest coastline in West Africa how come it doesn't have great beaches as tourist attraction?
Who knows maybe the local government(s) didnt put in work making it attractive. The most popular beach is in lagos if I had guess but it's the smallest.
Both Akwa Ibom and Ondo claim to have the longest coastline. I didnt understand how this issue could come up until I learn about the coastline paradox from Real Life Lore. Link to his video below.
The coastline paradox is the counterintuitive observation that the coastline of a landmass does not have a well-defined length. This results from the fractal-like properties of coastlines, i.e., the fact that a coastline typically has a fractal dimension (which in fact makes the notion of length inapplicable). The first recorded observation of this phenomenon was by Lewis Fry Richardson[1]and it was expanded upon by Benoit Mandelbrot.[2]
BabaRamota1980: The river gives access but Delta can toll it for IGR and make vessels in and out of Benin River pay access fee.
Delta has no such power. Interstate commerce is regulated by the federal government exclusively. Read the constitution.
Exclusive list items:
36. Maritime shipping and navigation, including - (a) shipping and navigation on tidal waters;
(b) shipping and navigation on the River Niger and its affluents and on any such other inland waterway as may be designated by the National Assembly to be an international waterway or to be an inter-State waterway;
(c) lighthouses, lightships, beacons and other provisions for the safety of shipping and navigation;
(d) such ports as may be declared by the National Assembly to be Federal ports (including the constitution and powers of port authorities for Federal ports).
Water from such sources as may be declared by the National Assembly to be sources affecting more than one state
64. Water from such sources as may be declared by the National Assembly to be sources affecting more than one state
Business › Nigeria’s Commodity Exchange System Stunted Over Limited Private Sector Presence by Blue3k(op): 7:51pm On Jan 23, 2020
