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To support the current diversification drive and address pricing flaws in the agricultural sector, the Nigeria Sovereign Investment Authority (NSIA) is considering taking over the Abuja commodity exchange in 2018.
Uche Orji, managing director and chief executive officer, NSIA told BusinessDay during the signing of a $5 million agro loan with Babban Gona in Lagos over the weekend.
“The NSIA has indicated interest to take over the Abuja exchange and operate it and we are in advance negotiation with the Bureau of Enterprise, Ministry of Agriculture and the Central Bank of Nigeria who are the owners of the warehouses,” Orji said.
“The objective of the exchange is not about storage but about price transparency. It is a mechanism for pricing to address the pricing flaws,” he said.
Orji stated that as soon as the exchange commences its operations, NSIA will create a futures market on the exchange to help farmers get funds for expanding their farming areas.
Despite off-taking agreements on pricing between manufacturers and farmers, farmers however, sell their produce in the open market whenever prices are high and to manufacturers when prices are low.
Similarly, manufacturers always refuse price reviews with farmers when cost of production rises, forcing farmers to operate at a loss.
“The exchange will address the pricing issues so that we do not have big corporations going into farms to buy from farmers and pay whatever price they want. The exchange will create a transparent mechanism for pricing,” he said.
He noted that agriculture is one of the main sectors NSIA is focused on, as well as health, road and power sectors.
Speaking on the $5o million agro loan to Babban Gona, Orji said that the investments will help 50,000 farmers farm in a better way, improve their production and help them get the right pricing for their produce, while improving their living standards which impacts their nutrition.
Sanusi Lamido Sanusi, chairman, Babban Gona said that the $5 million loan is a five year medium term loan with a two year moratorium.
“This shows the commitment of the Nigerian government and its institutions to agriculture. We all understand the importance of the sector and we have been committed to it for years.”
“This investment is not just about diversifying our GDP, or making farmers rich but it is about saving lives. It is about the human capital of the society. We cannot grow as a nation long term if half of the next generation is already mentally deformed from childhood because of malnutrition,” Sanusi said.
The Emir noted that his organisation is not focused on making profits but to address the issues of malnutrition in the country, while calling for the creation of Nutrition Ministry in each state of the federation.
Speaking also during the signing ceremony, Kola Masha, managing director, Babban Gona said the investment would directly be impacting over 6,000 smallholder farmers which will translate in impacting about 50,000 individuals and families.
“This investment will help Babban Gona be on its path to catalysing additional capital to enable it reach its goal of supporting a million farmers by 2025. We are very excited to take this loan push forward to the next level.”
Currently, Babban Gona is working with 40,000 maize and soybeans farmers in Kano, Kaduna and Kastina.
Josephine Okojie
