Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
41
A recent study finds that frequent and unpredictable changes in government policies,
subsidies, and procurement procedures send confusing signals to agribusinesses and
generate uncertainty that undermines investment in agriculture.78 The study found that
unclear division of responsibilities between federal, state, and local governments
contributes to duplication, omissions, and a lack of policy coherence.
The Cost of Doing Business study79 reports on a separate set of perceptions about the
strength of the institutions Nigeria has put in place to support the business environment.
The indicators are constructed from business surveys, focusing on business regulations.
Overall, Nigeria ranks 147th out of 189 countries covered by the surveys. When asked
about how well laws and regulations protect investors, Nigeria falls into a large middle
range of countries. However, respondents complain that the Government does not do
enough to enforce contracts.
The government is seeking to improve its policy framework through the Agricultural
Transformation Agenda Program, which aims to reduce the dependence on imports and
transform Nigeria into a net exporter of agricultural products; the government’s role is to
provide an environment that enables the private sector to lead the transformation.80
Recognizing the widespread shortcomings in earlier programs to improve access to key
inputs such as seed and fertilizer, the new agenda features sweeping reforms in the
fertilizer and seed sectors. Both sectors have been liberalized, thereby ending the
government’s direct role in procuring and distributing these inputs. Supported by a
program called the Growth Enhancement Scheme (GES), private dealers now sell seed and
fertilizer directly to farmers and have introduced other measures, such as selling inputs in
smaller packages, which are having a positive impact. Nigeria also developed an Electronic
Wallet (e-wallet) system that delivers vouchers for subsidized seed and fertilizer directly
to farmers’ mobile phones. Farmers use the electronic vouchers to purchase inputs from
registered agro-dealers across the country (for details, see 5 in Chapter 3).81 In 2014,
almost 10 million farmers were enrolled in the new input subsidy program and redeemed
fertilizer and/or seed through the e-wallet and other value chain support programs.
INFRASTRUCTURE
The high cost of Nigeria-produced commodities erodes the profitability not only of
primary production activities but of post-harvest activities to add value. High primary
production costs translate directly into higher costs for processing firms that rely on
domestically sourced raw inputs. Processing costs are further increased by unreliable
power supplies, which often disrupt production runs and require processors to buy
generators, as well as by high labor costs, which result from a poorly skilled labor force
and high employee turnover (a particularly acute problem). The cost of producing cassava
78 World Bank (2014f).
79 World Bank (2013b).
80 Adesina (2013).
81 Adesina (2013).