A Financial Economist has advised agribusiness investors on need to take caution over foreign loan.
9Janewshub.com.ng reports that agribusiness investors in the country have been advised on the need to take caution while seeking foreign loan because of the possiblity of high interest rate in the year 2023.
The financial economist also advised them on the need to shun foreign loan and embrace government intervention funds instead, especially this year 2022.
Speaking in Ibadan during the first edition of this year monthly training season for members of the Oyo State Chapter Institute of Agribusiness Management Nigeria (IAMN), Dr. Oreitan Adigun caution agribusiness investors on several indices they need to consider while setting their plans for the year 2022.
Dr. Oreitan in his lecture titled, “Economic Outlook and Agribusiness Direction In The Year 2022”, highlighted the global economic outlook for the year 2022, 2022 Economic Outlook for Nigeria, Nigeria’s key Agribusiness Statistic Vizaviz 2022 Budget, Agribusiness Opportunities, AfCTA and Agro Export and suggested way forward for the Investors for them to have a profitable year.
Dr. Oreitan in his lecture stressed that the after surpassing to the upside in 2021, global inflation is expected to remain elevated this year.
He said, “due to Global Outlook according to the world Bank and the emergence of the Delta Variant in 2021, thereafter Omicron Variant, debt sustainability, economic growth are unlikely to be favorable for developing countries such as Nigeria, most especially where global growth is projected to be 4.1% in 2022.
Economic Outlook in Nigeria in the year 2022 is projected to grow by 3%, based on an expected recovery from the crude oil prices and production, further depletion in foreign reserves from $35billion. Exchange rate depreciation, Omicron Variant could exacerbate these risks. Rapid spreading of the Omicron Variant and the experience from the disruption during the pandemic may become increasingly important in 2022.
He said, “Significant business disruption call for concern, Covid has given rise to global income inequality. He maintained that another challenge to the global economy is from a continue trend towards de-globalization, and faster-than-expected inflation.
Dr. Adigun in his lecture however suggested that farmers should be more sensitive to macroeconomic parameters, the general price level – inflation, Money Policy Rate (MPR), stressing that this is not a good time for foreign loans, instead farmers should seek for more intervention opportunities, and invest wisely in export than import, stressing that naira’s value is worrisome, urging farmers that time to earn foreign currency is now.
He also said that farmers needs to be more sensitive to the economic, social and most importantly political issues in this year 2022 cannot be over emphasized because it is the ore general election year in Nigeria.Therefore they should do whatever within their capacity.
“The transition towards decarbonization of economy in response to climate change will create challenges, therefore lesson learned about resilience in the face of disruption during the pandemic will be of great help.” Oreitan said.
Talking about the World Economic outlook as projected by World Bank group President David Malpass, Dr. Oreitan said, “The world is undergoing phase of exceptional uncertainty. He stressed that as regards developing economies and conflict-afflicted countries-output and investment will remain markedly below pre-pandemic trends, because of lower vaccination rates, stressing that It is difficult to predict how rapidly interest rates will rise as advanced economies slow down their expansion in monetary policies.
He noted that Issues with fiscal and monetary policy would have implications for exchange rates. He maintained that Inflation rate will be 13%, exchange rate N410/$, there will be high unemployment at (27%), while poverty index will be at 40%, National development plant 2021-2025 inaugurated. Renew focus in growing the non oil sector, that is agribusiness in particular. He cautioned that Insecurity could hamper agricultural production in the year 2022.
Dr. Oreitan while speaking on Nigeria’s Key Agricultural Statistic Vizaviz 2022 Budget,said “agricultural sector remains the largest employers of labour in Nigeria, employing more than 36% of the labour force, maintaining that more than 80% of Nigeria’s farmers are small holders farmers (SHFs), stressing that these numbers accounts for 90% of Nigeria’s agricultural produce. He decried the small fraction always earmarked by the government for agricultural research and development(R&D).
He said, “Consistence in trade deficit over the years. Agricultural budget has to be less than 2% of the total budget size in the last ten years. This significantly falls short of the 10% specified in the Maputo declaration. He noted that In 2014 at Malabo, African Heads of States signed to commit at least 10% of their national budget to the agricultural sector. Unfortunately, Nigeria has been trailing with regards to fulfilling this commitment.
“The 2022 appropriation bill (budget) of 17 trillion tagged “Budget of economic growth and sustainability. 291.4 billion was allocated to the agricultural sector, which represents 1.78% and this falls short of the Maputo benchmark as usual.” Oreitan explained.
Talking of agribusiness opportunities, the Financial Economic Expert stressed that agribusiness opportunities are numerous ranging from food and livestock production, processing, storage, transports/logistics, marketing, commodity trading, consultancy, agro export, AfCFTA, The green imperatives, National livestock transformation programme among others.
In his lecture about the Agro Export Business, Dr. Oreitan said the share of agriculture in Nigeria’s total export earnings remains small compared to crude oil exports. He stressed further that Nigeria’s major agricultural imports include wheat, sugar, fish and milk, while it’s main agricultural export are sesame seeds, cashew nuts, cocoa beans, ginger, frozen shrimps and cotton. He noted that Sesame, Cashew nuts and cocoa account for more than half of the nation’s agricultural exports. He maintained that while agricultural export has been on the decline, Nigeria’s agricultural engagement has been on the increase.
While talking about AfCFTA and Agro Export. Oreitan said, “African Continental Free Trade Area(AfCFTA) was launched on January 1, 2021, comprises of 54 of the 55 members of the AU. Integrating a market with a combined GDP of $3.4 trillion. According to the World Bank, the new free trade area is expected to boost African’s exports by $560billion and lift more than 30m people out of extreme poverty. He said, “West Africa is expected to be the major beneficiary, the UN economic Commission for Africa opined that the AfCFTA could boost intra-African trade by 40-50% by 2040, with intra-African exports forecast to increase by 25-30% by same year.
In his contributions, Mr. Olukunle Samson, Chairman of Oyo State Chapter of the Institute of Agribusiness Management Nigeria said, “We are here today to have our monthly training workshop, because every month we a program like this, whereby we bring together every members of the institute to basically share values.
“Today’s gathering is to sensitize and educate us, as well as to help us to have a reformed outlook on the 2022 in our agribusiness sector and the resource person who spoke with us today is somebody who has a says, he’s a somebody who has something to offer in helping us to set our target, our expectations for the year, the things we need to look out for, the indices you need to consider when setting out the plans for the year, of course most people will have set out their plans but at least this meeting is to help you further as professional in agribusiness. The meeting will help you in how to manage your expectations and to help you in making sure that you get the best out of agribusiness investment for this year and beyond. Samson said.
Speaking about the membership of the institute Samson said, “Our members are active players, they are professionals because agribusiness is a wide field actually it’s not just agric but an agriculture and business, that means people who are into agriculture and people who are into agricultural businesses and the value chain is long and wide, so everybody in that value chain, even people outside that value chain can also become members of IAMN because everybody eats on daily basis, agriculture touches everybody’s lives, so everybody who is interested in agribusiness is welcome.”
While talking about issues affecting the high cost of food commodities in the market and challenges facing the agribusiness Investors, Samson said, production is the key, how many people are growing food, a lot of the food we eat in Nigeria we are not getting best out of it because we are not planning properly. As I’m speaking to you now we are in Ibadan and Ibadan is like a poultry Capital of the West Africa not just Nigeria. Right behind us at Oluyole Housing Area we have paltries, there are so many people in the value chain of poultry and there’s a market here on Mondays and Thursdays in Oluyole for poultry and it feeds the entire country and beyond, we are not taking the advantage of that.
“We have to look at the inputs as regards the policy from the government, how has the government policies scheme in such a way to help these players, to help even the smallest people in the value chain, I’m referring to the local producers, the local farmers the feed input has gone to the roof, those farmers can do it better if policies is right, as in if the infrastructure are in place, if the people that are investing are encourage to invest more, then food will be cheaper for people to access, that is just one aspect, as we all known that poultry is not everything about agriculture, we still have crops and the same thing applies, we have cash crops which are meant for cash but if we are talking about food, a lot of food we grow in this country go to waste because of no proper way to preserve them and there is a huge gap between the research institutes and the end users.
“There is lot of research findings on the shelves gathering dust, there are things we can do to change the narratives and that is why we have an Institute like this to bridge that gap between the people that are investing in that business and there are latest researches, latest ideas and the values that are locked up in those researches and we make use of them, we bring people together to inform and educate them, and then people become aware of those latest ideas, and they begin to deploy all those knowledge.
“We need to ask ourselves questions, because of at the end of the day if our production is wasted, then we begin to say are people getting enough to eat this are some of the things we are into.
Government are already doing something, we should even applaud them, because during the training season somebody mentioned anchor borrower program, those are the things that have been out in place to help the farmers, and the money are there waiting to be access, there are people that are already accessing the money, it’s possible and visible, though some of the people that have collected the money are not paying back, but are we looking at those challenges they’re facing that doesn’t give them the chance of paying back the money, we should look at what are the challenges they’re facing in deploying the money they have including the financial assistance they have collected, we need to help them to see that they are able to pay back the funds as well make profits in their investments.
“If you are giving money to people to work you have to set up monitoring team to assist them that they pay back the money as well make their profits. Some of those people are start-uppers in the business, Some of them don’t have the expertise, how are you helping them through every step of the ladder to make sure that they overcome whatever challenges they face, how many extension workers they use the way they should be, these are little little things the government need to look at and supervise to make life more easier for the farmers.
In the area of policy making, government needs to take in cognisance of the smallest players while making policy decisions. While making decisions at the highest level they need to take the cognisance that the smallest players in the chain must benefit of it. Government needs to harness the police that will favour the smaller farmers, they need to be encouraged to even become better, so policy decisions include making sure that inputs are available, making sure that the already deployed funding for the investment how is it being done.”
“We need to continue asking ourselves these questions, are we satisfied with the market here, is everybody eating what they should be eating, is the food available, is it cheap enough for everybody to access, so if we don’t drive the production at the lowest level, the multiplier effect of it is what we are currently facing today in our markets, the market is dragging the prices, the government should have a better overview and utilize those overview to the advantage of the smaller farmers.” Olakunle said.