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Alluvial & AngalaFintech CEO Dimieari Von Kemedi assesses how quickly Africa can rebound and key opportunities including agriculture and technology, in a discussion led by the FT’s Africa Editor David Pilling.
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A widow with seven children, she is among the 70% of all Nigerians employed in agriculture. She has grown sesame, maize and cassava her whole life, but coronavirus lockdowns forced her to abandon her three hectares.
“We stayed at home, and everything came to a standstill,” she said, speaking in her village of Bakin Kogi in Nasarawa state, east of the capital Abuja.
Daniel is now among 65,000 Nigerian farmers who will access tractors, seeds, fertilizer and finance from a $20.4 million grant from the Mastercard Foundation aimed at helping agriculture recover from the COVID-19 pandemic in a way that will help it to withstand future crises such as climate change.
Under the arrangement, in which the Foundation teamed up with Alluvial Agriculture, a farming collective, some 200 tractors, 330,000 kilograms of seeds, climate advisories and digital payment systems will enable farmers like Daniel to help feed the nation of nearly 200 million people.
“We are bringing farmers together in what we call community blocks so they can support each other… and to attract a large pool of finance so they can continue to expand,” Alluvial founder Dimieari Von Kemedi said.
The average Nigerian farm has 1.8 hectares, according to the U.N. Food and Agriculture Organization, but the project will group them into 500-hectare collectives to create economies of scale.
Despite years of government attention and millions of dollars in targeted Central Bank loans, Nigeria’s farms have low yields and less than 1% of farmland is irrigated.
Many work the fields by hand and cannot access fertilizer or high-quality seeds. Food inflation hit nearly 17% last month following coronavirus-related disruption and flooding in the northwest.
Bala Musa, another Nasarawa state farmer, said the grant would keep him afloat after the lockdowns cut his access to Lagos markets earlier this year: “If not for them we wouldn’t have been able to farm.”
David Pilling OCTOBER 22 2020 2 Print this page For 45-year-old Ladi Okudu, a smallholder farmer in Nasarawa state, east of the Nigerian capital of Abuja, buying a John Deere tractor with a price tag of more than $30,000 is out of the question. Even if there were tractors available to hire — which mostly there are not — at some $70-$80 per hectare, the rental cost is steep to prohibitive. Mrs Okudu, who has been farming for 25 years, uses hand tools to produce small quantities of sesame, maize, rice and cassava on her modest plot of land. Like millions of subsistence farmers around Africa, she is stuck in a low-productivity rut that virtually guarantees she will never escape from back-breaking poverty.
The pattern is repeated across much of the continent. The result is that Africa, instead of being a net exporter of food, is a net importer, spending some $40bn a year of precious foreign exchange on basic foodstuff. Not only is this a waste of resources, say critics of existing policies, it also leaves many at risk of hunger. That vulnerability has been highlighted by the Covid-19 crisis. Earlier this year India temporarily suspended exports of rice while exports from other countries, including Vietnam and Pakistan, were restricted because of logistical logjams. Muhammad Sabo Nanono, Nigeria’s agriculture minister, has warned that food security in parts of the country could become a serious issue.
Nigeria, which generates 40 per cent of gross domestic product and 60 per cent of employment from farming, normally imports roughly $3bn in food staples. Last year, the government sought to cut that bill and spur local production by ordering the central bank not to dispense scarce foreign currency to food importers. It also closed its land border to prevent smuggling of cheap imports, especially from neighbouring Benin.
Dimieari Von Kemedi, founder and managing director of Alluvial Agriculture, a Nigerian company that seeks to commercialise smallholder output, argues that this is not the way to solve the problem. “The larger the number of people involved in primary agricultural production, the less productive that country is,” he says. “So we have gotten things wrong.” On a mission: an Alluvial tractor in Nasarawa Successive Nigerian governments, he says, have regarded farming as an employer of last resort and have shunned modernisation policies for fear of creating unemployment. “The belief is that everyone in rural areas in Nigeria should be a farmer and as a result of that we have not fully mechanised, automated and digitised our agriculture,” Mr Kemedi says. “That has lowered our productivity and means we can’t compete.
You can buy rice in India, put it on a ship to a Lagos port, offload it and pay a heavy duty — and it still comes out less expensive than locally produced rice.” Mr Kemedi says the answer is not to shut out more efficient products from abroad, which will only raise the price for Nigerian consumers.
The key, he says, is to raise productivity. A scheme Mr Kemedi pioneered nearly a decade ago in the oil-rich Delta region, whose wet conditions he describes as ideally suited to rice, has been aggregating small plots of land owned by thousands of smallholders. By working with farmers on contiguous plots, Alluvial seeks economies of scale in the purchasing of inputs such as seed and fertiliser, and in getting better prices from buyers, including flour mills, rice processors and brewers.
In 2018, Alluvial signed a contract with John Deere and its distributor in Nigeria, Tata Group, to lease tractors to rice farmers in the Delta and Cross Rivers states for as little as 20 minutes.
Under a $20m, two-year partnership with the Mastercard Foundation, announced this month, Alluvial hopes to replicate the scheme for 65,000 farmers across the country. It offers farmers higher-quality seeds, fertiliser and agrochemicals, as well as basic advisory services by phone. Alluvial hopes the extra support will lift yields of rice from 2.5 tonnes per hectare to 4.5 tonnes, and for maize from 1.5 tonnes to 4 tonnes.
The company has chosen plots in states including Adamawa, Bayelsa, Benue, Delta, Kaduna, Kano, Kebbi, and Nasarawa. The idea, says Mr Kemedi, is that by the time Mastercard funding dries up, the projects will be self-sustaining — and scalable. “This is not proof of concept or just a pilot,” he insists, saying that the model itself has been validated in the Delta. If all the land reached by the Mastercard deal were aggregated, he says, it would cover a landmass equal to 35 per cent of Lagos state.
One of the 65,000 farmers due to be signed up is Mrs Okudu. She will foot half the bill for tractor hire and a quarter of that for seed imports so that she can establish a credit record that will outlast the scheme.
Mr Kemedi concedes that making progress has not always been easy. In Benue state, where Alluvial has teamed up the Federal University of Agriculture, farmers have not planted anything for five weeks because of arguments over terms. “While they’re arguing they could be making a living,” Mr Kemedi says in frustration. “There’s a general mistrust, because people have been disappointed too many times before.”
65,000 smallholder farmers in Nigeria are to directly benefit from quality land, seeds, fertilizers, mechanization, and storage over the next two years, as part of a new program to achieve sustainable recovery and build resilience from the COVID-19 pandemic. Launched by the Mastercard Foundation, the program focuses on building food security and increasing digital and financial inclusion within the most vulnerable farming communities.
The program, which is aimed at helping the country reverse the pandemic’s impacts on food security and bolster it even further, will support more than 3 million people while helping farmers increase their farm productivity and incomes. It is expected to “tackle the root causes of hunger and poverty through a $20.4 million commitment by the Mastercard Foundation”, read a statement. Out of the 65,000 target beneficiaries, BusinessDay exclusively learnt that 80 percent of them will be women and there is also a conscious effort to ensure many new farmers are introduced into agriculture through the program.
To achieve this, Mastercard is working with Alluvia, described as a highly scalable private sector response to decades of failure by various parties to tackle one of the world’s most pressing issues: food security. It deploys an innovative business model that provides comprehensive support to small farm enterprises and smallholder farmers.
The Mastercard Foundation’s COVID-19 Recovery and Resilience Program will be implemented in partnership with Alluvial Agriculture, and enable participants to significantly improve yields, increasing from 2.5 tons of rice per hectare to 4.5, for example, or from 1.5 tons of maize to 4 tons.
“Farmers must be at the forefront of helping us recover from this crisis,” said Chidinma Lawanson, country head, Nigeria, at the Mastercard Foundation. “This is a sector where there is tremendous potential, not just to create food security, but to enable work. But this isn’t just about recovering from the impacts of the pandemic; it’s also about building long-term resilience in the agricultural sector so that it can withstand the effects of emerging and future issues—like climate change.”
Dimieari Von Kemedi, managing director of Alluvial, told BusinessDay that the organization is working with CIAT and IITA, in introducing best agronomic practices to farmers and in the case of maize and soybean, exploring new improved varieties that can be introduced in the country.
“We are going to be doing some seed multiplications around new varieties which we have brought in from Mexico for the maize,” he said.
The project provides 50 percent of the cost of mechanization and 75 percent of inputs and the balance will be paid by the farmers at the end of the season when off-takers would have also been secured to purchase their harvests.
“Assuming we were planting only rice at a modest 4 tons per hectare, this would be 260,000 tonnes of rice produced by this project in one season,” said Kemedi. “This is being done at serious scale”.
Alluvial’s innovative business model provides comprehensive support to smallholder farmers, including training, technology, land preparation, irrigation, input supplies, and market access. The company achieves this by organizing adjacent farms in community blocks. This means that tractors, for example, can efficiently plow each of the smallholdings, saving weeks of toiling by hand.
“With this tremendous support from the Mastercard Foundation, and expertise from numerous valued partners, Alluvial is transforming the approach to tackling hunger and poverty by channelling resources into sustainable food production as opposed to transitory food aid,” said Kemedi. “We invite all farmers, agriculturalists, and others to join us in one of the world’s most pressing endeavours.”
Using technology accessible from low-tech mobiles, Alluvial is also providing training and peer-to-peer advice on farm and market information, including rating providers of inputs and services. Alluvial’s Market Information and Digital Payment System also enable fast and secure electronic payment through the Farmer Network Digital Payment System. Farmers can purchase from vetted providers of seeds and other inputs and services and securely receive payments by direct transfer.
Alluvial, according to Kemedi, is hoping to sustain this beyond the 2-year support from MasterCard foundation and is already working with a group of banks who are registering the farmers. By virtue of working with on the project, the banks would see firsthand if the operations have been successful or not.
“That apart from anything else is to help the farmers build a credit history,” said Kemedi, and to be able to approach banks on their own for subsequent funding and being attractive to other groups of investors.
Building on the World Bank’s 2019 Systematic Country Diagnostic for Nigeria, this Country Private Sector Diagnostic (CPSD) argues that Nigeria is uniquely positioned for strong economic growth and should focus on a wider private sector-led growth strategy to leverage its considerable factor endowments and seize market opportunities. Nigeria is rich in agricultural and mineral resources. Its population of about 200 million people presents a huge market—the largest in Africa—for domestic production. In addition, a large segment of Nigeria’s labor force is young and entrepreneurial—5.3 million people entered the labor force in 2018 alone. Moreover, market access to other member countries of the Economic Community of West African States (ECOWAS) and the wider African region offers opportunities to Nigeria’s private enterprises. Yet, Nigeria’s resource endowments and opportunities have not translated into sustained economic growth and shared prosperity for its citizens.
According to the CPSD, addressing the deficiencies stifling growth in Nigeria’s policy framework and its infrastructure would enable the Nigerian private sector to create millions of quality jobs for its rising population, mitigate Nigeria’s economic vulnerability by diversifying exports, and reduce inequality and instability by driving economic activity in underdeveloped regions. There is significant potential for accelerating growth and export diversification through increased private investment in sectors such as agribusiness, mining, manufacturing, and the digital economy.