VZCZCXRO0774
PP RUEHMA RUEHPA
DE RUEHUJA #2486/01 3541250
ZNR UUUUU ZZH
P 191250Z DEC 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4762
INFO RUEHOS/AMCONSUL LAGOS 0487
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 03 ABUJA 002486 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EE/TPP/ABT/ATP SPECK 
DEPT PASS TO USTR-AGAMA 
TREASURY FOR PETERS AND HALL 
DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ ANESA/DHARRIS 
USAID/AFR/WA FOR TWAY, USAID/AFR/SD JHILL, AND USAID/EGAT MOTT 
USDA/FAS FOR SIMMONS AND MCKINNELL 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON ETRD EAID EFIN PGOV NI
SUBJECT: NIGERIA: AGRIBUSINESS CLIMATE IN NIGERIA 
 
¶1. (SBU) Summary:  In November, the USAID contractor Booze Allan 
Hamilton (BAH), conducted a survey on the agricultural business 
climate in Nigeria focusing on agribusiness, trade, access to credit 
and property.  What they found is that poor infrastructure in the 
country contributes to increased business costs.  Further more, the 
government develops unpredictable policies and poorly implements 
others, which damages investors' confidence.  Lack of and access to 
information and regulations tends to be uneven and unreliable. 
Despite these constraints, the team concluded that there are 
abundant opportunities for expanding agribusiness by increasing 
access to finance, improving information dissemination, improving 
policy and regulatory environment as well as strengthening 
institutions and enhancing political will power.  The final draft of 
the USAID/BAH report will be available in 2009. End Summary. 
 
¶2. (SBU) BAH consultants talked to officials in the private, public 
and donor community, reviewed laws and policies and completed a 
survey on the agricultural business climate.  The assessment was 
centered on the agriculture sector, more specifically looking at 
areas of agribusiness, trade, access to credit and property. The 
following paragraphs are highlights of their findings.  The official 
report will come at the beginning of 2009. 
 
Agribusiness 
------------ 
 
¶3. (SBU) Infrastructure remains a serious issue for agricultural 
competitiveness, specifically lack of rail and reliable rural road 
transportation and reliable power sources.  Transport costs play a 
particularly important role in staple crop competitiveness.  The 
lack of reliable and affordable power is a major constraint to 
agroprocessing and pumps for irrigation. 
 
¶4. (SBU) Farm productivity and competitiveness is hampered by both 
poor quality seeds that generate higher productivity and are pest 
and disease resistant and very poor access to fertilizers resulting 
from challenging policies and high prices.  The seed market has a 
history of limited oversight, poor quality and low farmer 
adaptation. 
 
¶5. (SBU) While there are many skilled farmers and businessmen, 
overall management skills appear to be a constraint within the 
agribusiness sector, particularly for medium-scale commercial 
farming operations and food processing ventures.  There is a need 
for a greater number of skilled agribusiness owner and managers. 
 
¶6. (SBU) Improving efficient access to consumer markets within the 
country - supermarkets, wholesale and distribution - is crucial to 
enhance agribusiness investment.  A focus on the significant 
Nigerian consumer markets will drive interest and investments in the 
overall domestic and regional agricultural value chain.  This, 
combined with enhanced on-farm productivity through the application 
of science and technology, will expand the sector's ability to feed 
the region. 
 
Trade 
------ 
 
¶7. (SBU) Import/export processes are cumbersome, costly and 
inefficient, and the rate of examination by customs officers (70%) 
of goods moving through ports and border crossings are the highest 
in the region.  The lack of transparency, predictability and 
coordination in the import/export process are coupled with excessive 
documentation requirements. 
 
¶8. (SBU) Modern information technology (IT) systems within Customs 
are lacking leaving the customs processing in disarray and less 
efficient.  The Government of Nigeria (GON) has launched new efforts 
to adopt modern processes and practices, but these needs to be 
accelerated.  Customs has delegated their role to value, classify, 
and determine the level of inspection to a private customs service 
provider; however the private run system is fraught with 
inefficiencies and opportunities for rent seeking with limited 
oversight from the Customs officials. 
 
¶9. (SBU) The relationship between public border agencies, port and 
private stakeholders is not productive, and consultation is 
infrequent and not formalized.  In the past, there has been limited 
willingness to reform the customs process, although there are some 
encouraging policies that have been set to speed up transit time in 
the ports. 
 
ABUJA 00002486  002 OF 003 
 
 
 
¶10. (SBU) Conditions at Apapa port are poor, and the 30% reduction 
in cost and improved efficiencies projected as result of the private 
takeover of terminal operations have not been realized.  It takes an 
average of 28 days to unload from the port until goods depart to the 
market.  Many traders are using the neighboring Benin port where 
charges are 50% less and processing time is faster. 
 
Access to Credit 
---------------- 
 
¶11. (SBU) The overall banking sector is fairly sound and is 
expanding rapidly.  This rapid expansion remains a concern as the 
capacity of the Central Bank (CBN) is already stretched, and their 
regulatory framework and procedures are still developing.  Increased 
capacity and technical skills at the CBN are needed to accommodate 
the rapidly expanding banking sector. 
 
¶12. (SBU) Better access and basic understanding of agricultural 
lending is needed for most banks, although there are some banks that 
are expanding lending to the sector.  Furthermore, banks need basic 
tools to limit lending risks such as: credit bureaus (the CBN just 
released guidelines and is accepting license applications); modern 
secured transactions law with electronic registry; condominium law; 
warehouse receipts system; and modern leasing law (which will rely 
on the modern registry). 
 
¶13. (SBU) Microfinance banks (MFBs) are weak, but are the ideal 
vehicle to service rural and agricultural areas.  The MFBs should be 
targeted for training on agricultural lending.  At the same time, 
farmers should be encouraged to form cooperatives as a means to give 
greater borrowing power to small farmers.  Finally, the CBN needs 
even greater capacity in oversight of rapidly expanding microfinance 
banks. 
 
Property 
-------- 
 
¶14. (SBU) Most agricultural land is held by small holders under 
customary ownership.  The process for transferring customary 
ownership to statutory (titled) ownership is quite long and requires 
dedication and time to complete.  Few small holders have the 
knowledge or ability to complete the process from the local up to 
the state level.  Accordingly, few have the opportunity to use their 
land as collateral for loans. 
 
¶15. (SBU) Under either titled or customary ownership, the state can 
decide to use the land for public purpose, which can include 
relocating a settlement to provide the land for industry investment, 
but adequate compensation is required.  Land that is under customary 
ownership appears in reality to be less secure than land under 
titled ownership, although this is not reflected under the policy. 
 
¶16. (SBU) Agribusiness and other investors are quite secure in their 
land ownership and, in the North, they do not have many problems in 
acquiring additional land as necessary.  However, land security and 
acquisition is purportedly more challenging in the South where 
population pressures on the land are greater and the land policies 
differ.  In land case disputes, most are handled adequately on the 
local level through mediation with local leaders, while land 
disputes that must go to court can take years to resolve. 
 
Issues for reforms 
------------------ 
 
¶17. (U) After a USAID/BAH roundtable discussion with the Nigerian 
public and private sector, the following issues were presented by 
stakeholders as the most pressing issues for reforms. 
 
¶18. (U) Priorities for reforms in the area of trading across borders 
are: 
-- Reduced transit times and costs of goods. 
-- Improved policy and regulator environment for agriculture seeds 
and fertilizer. 
-- Continued reform and stability in the policies and regulations 
related to tariffs and import bans. 
-- Strengthen institutions and streamline agencies such as the 
National Agency for Food and Drug Administration and Control 
(NAFDAC), and Consumer Protection Council (CPC). 
-- Greater capacity to develop fact based analysis of agriculture 
policies and strategies. 
 
ABUJA 00002486  003 OF 003 
 
 
-- Build capacity to establish international standards: training, 
skill acquisition, and risk analysis. 
-- Enhance public-private partnerships. 
-- Encourage the use of computer program ASACUDA 3.0 (++) and extend 
to all port terminals. 
-- Fully integrate ASACUDA mechanism into export trade/transactions. 
 
-- Review service charges. 
-- Make operational inland container terminals. 
-- Integrate the informal trading sector. 
-- Create benchmarking for product lines in Nigeria. 
 
¶19. (SBU) Priorities to significantly expand agribusiness are: 
-- Improved application of science and technology to increase 
production to meet market demand. 
-- Increased access to finance/credit access, including storage and 
inputs. 
-- Development of promising value chain and formation of business 
linkages and clusters for staple crops. 
-- Improved information dissemination about markets and prices. 
-- Political willpower to enhance policies and increase investments 
favorable to private sector led growth of the agriculture sector. 
 
¶20. (SBU) A final draft of the USAID/BAH report on agribusiness 
findings and recommendation for way forward will be made public at 
the beginning of 2009.  Consultations with the GON, donors, and the 
private sector will be held in Nigeria to validate key findings and 
help establish priorities for action.  USAID will use these findings 
to develop an active program to address agriculture trade, 
transportation reforms, and agriculture policy in support of 
Nigeria's development of a Comprehensive African Agriculture 
Development Program (CAADP) action plan for Nigeria.  The follow up 
program will accelerate the implementation of the US Global Food 
Security Response program in Nigeria. 
 
¶21. (U) This message was coordinated with ConGen Lagos. 
 
SANDERS