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Agriculture vs Unemployment: Buhari’s farming policy has a major flaw

How workable is Buhari’s plan to send able-bodied young people to the farms as a way of solving unemployment in the country?

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Banks guaranteed N3.6 billion loans to farmers under the ACGSF - CBN, Agriculture vs Unemployment: Buhari's farming policy has a major flaw, Does sending "able-bodied youths" to the farms increase productivity?, Agricultural financing, Top AgriTech deals currently on sale in Nigeria – June 2020

Two weeks ago, President Muhammadu Buhari directed that food and fertilizer importers should not be given access to foreign exchange by the CBN.

The President added that Nigeria has lots of young people (median age of 17.9), hence, agriculture is a means to solve unemployment among youths. 

“We have a lot of able-bodied young people willing to work, and agriculture is the answer,” the President said.

However, Nigeria’s problem in Agriculture is not a lack of personnel, but a problem with productivity. 

READ: Can Agriculture replace Oil in Nigeria?

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Is productivity related to manpower in other countries? 

The Netherlands is Europe’s largest agriculture exporter, boasting of Europe’s most advanced agriculture sector. In 2019, the Netherlands exported €94.5 billion worth of agricultural goods. That is a 4.6% increase in the €90.4 billion export figure for 2018. Around two-thirds of this growth is due to an increase in export prices, while a third is due to higher export volume.  

In 2019, the Netherlands had a labour force of 9 million, and just 2% of that figure is employed through agriculture. Meaningless than 300k people produce €94.5 billion worth of agricultural exports in 2019. 

READ: GTBank, Access Bank, 11 others pay workers N271.64 billion in H1 2020

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What about other emerging economies? 

Comparing Nigeria to the Netherlands does not paint a proper picture as the latter is a typical first world nation with most of the labour force out of agriculture.

However, other emerging economies also have large agriculture sectors, which could be comparable to Nigeria’s. 

The top 4 rice exporting nations of 2019 were India ($7.1 billion), Thailand ( $4.2 billion), USA ($1.9 billion), and Vietnam ($1.4 billion). 

The United States is the only top 4 exporting rice nation that is not regarded as an “emerging economy.”  

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(READ MORE: Lessons Nigeria can learn from Microsoft’s Global Skills Initiative)

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Does agriculture play a major role in their economic workforce/ productivity? 

India: The Asian giant has a labour force of 494 million, of which 44% are employed in agriculture, the Industry employs 23% of Indians while the Service economy employs 31% of Indians. 

However, despite being the world’s largest exporter of rice, agriculture produce did not even make India’s top ten exportsas industrial goods were responsible for India’s top ten exports. Mineral Fuels made up India’s top export in 2019 at $44.1 billion, followed by Gems and Precious Metals at $36.7 billion, and Computer Machinery at $21.2 billion. 

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India’s I.T sector is also a major producer of Indian productivity with domestic revenue expected to hit $44 billion in 2020, while exports revenue was estimated at US$ 147 billion. 

ThailandThe world’s second-largest exporter of rice had total exports of $245 billion in 2019, with a labour force of 39 million which is even less reliant on agriculture than India. 

READ: Zenith Bank blows past Access Bank as customer deposits cross N4 trillion

Agriculture contributes 8.4% to Thailand’s GDP, with Industry at 39.2% and Services being the highest contributor at 52.4%. 

Food is not a major top 5 export from Thailand, as Computer Machinery was its major export in 2019 at $40.2 billion, followed by Electrical equipment at $33.9 billion and Vehicles at $28.9 billion. 

(READ MORE: EFG Hermes highlights sectors that will boom Post-COVID)

VietnamSoutheast Asia’s star economy was the 3rd largest emerging economic rice exporter in 2019, with a labour force of 57 million. Vietnam recorded a trade surplus of $11.12 billion in 2019, from exports of $264.189 billion. 

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Agriculture contributes 15.3% to Vietnam’s GDP, followed by industry at 33.3% and Services at 51%. 

Vietnam exported $126 billion in electrical equipment in 2019 alone, with smartphones and spare parts making up $51.38 billion of that amount. Footwear exports came at $24 billion in 2019 while clothing was $16 billion. 

From the data above, agriculture which employs a component of emerging market economies does not contribute the most to their productivity, as manufactured goods are a major source of export income and rising. 

READ: Zenith Bank blows past Access Bank as customer deposits cross N4 trillion

Does sending more people to the farms increase productivity? 

Affiong Williams, the founder of food processing company ReelFruits, says that she does not think sending more Nigerians to the farms will increase productivity because “There is very little material productivity to achieve by increasing physical labour on the farms. Productivity increases in Agriculture, which moves the needle on production output, are more impacted by things like fertilizers, mechanization, and increased technical expertise. Manual labour is no match for any of those things.

READ: Pension: Low RSA balances – a subtly growing concern

What does Nigeria need to do to improve yields? 

The over-reliance on smallholder farming, in my opinion, is the biggest hindrance by the government to improve agro yields,” she added.

She added that even though the current model may be seen as a “development activity,” it barely achieves its true aim. 

To improve the output of any crop, one needs to do a lot of testing and control for so many factors to be able to arrive at the right conditions which increase productivity. Smallholder farmers do not have the resources to do this type of ‘A/B testing’ as it were and so it is very difficult to get true information and disseminate the right techniques that all of these farmers can apply.

“I think the government needs to enable more commercial farming by the private sector who are able to acquire the resources to increase productivity and disseminate such learnings at a faster pace, she said.

(READ MORE: IMF expects Nigeria’s GDP to shrink by 5.4% in 2020)

Explore the Nairametrics Research Website for Economic and Financial Data

Bottom Line: The Nigerian government is not focusing on the aspects that increase productivity in agriculture which experts say are fertilizers, mechanization, and increased technical expertise, components that cannot be replaced with more human capital in the farms. 

Secondly, growth in Nigerian agriculture yields can only be done through large scale commercial farming with the ability to conduct tests to find the right techniques for farmers.  

READ: MARKET UPDATE: CBN’s historic agriculture lending; Is it yielding the desired results? 

Finally, compared to contemporary emerging economies, Nigeria is seriously lagging behind in both agriculture exports and manufactured exports,  as Nigeria’s top ten agriculture exports hit just N289 billion between April 2019 – March 2020. 

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Debt Securities

DMO offers N150 billion worth of FGN Bond for subscription in January 2021

The DMO has offered for subscription, FGN Bonds valued at N150 billion for January 2021.

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Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

The Debt Management Office (DMO) has announced the offer for subscription, Federal Government Bonds (FGN Bonds), valued at N150 billion for January 2021.

This is according to a notification released by the DMO and seen by Nairametrics. The latest offers come in three tranches:

  • N50, 000,000,000 – 16.2884% FGN MARCH 2027 (10-Year Re-opening).
  • N50, 000,000,000 – 12.50% FGN MARCH 2035 (15-Year Re-opening).
  • N50, 000,000,000 – 9.80% FGN JULY 2045 (25-Year Re-opening).

Other key highlights of the recent offer

  • Units of Sale: N1, 000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter.
  • Auction Date: January 20, 2021.
  • Settlement Date: January 22, 2021.
  • Interest Payment: Payable semi-annually.

What you should know

  • Checks by Nairametrics revealed that the latest FGN Bond offer across three maturities is N90billion more than amount offered in the previous month (December 2020) at N60billion, indicating an increase of 150%.
  • Interested investors were advised to contact offices of any of the listed 13 Primary Dealer Market Makers (PDMMs).
  • The DMO reserves the right to alter the amount allotted in response to market conditions.
  • FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN), issued by the Debt Management Office (DMO) for and on behalf of the Federal Government. The FGN has an obligation to pay the bondholder the principal and agreed interest as and when due.

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Business

CAC says defaulting lawyers to face 2 years imprisonment for filing false documents

The CAC has stated that accredited lawyers found culpable for filing false documents will be liable to 2 years imprisonment.

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CAC to implement new technology for business registration, customers to print certificates

The Corporate Affairs Commission (CAC) has announced that any accredited lawyer found culpable for filing a false document in the course of company registration will be liable to 2 years imprisonment.

The new directive follows the relaxation of the strict requirements of the past where its officers need to compare signatures and looked at other documents to validate new filling.

According to a report from the News Agency of Nigeria (NAN), this disclosure was made by the Registrar-General of the Commission, Alhaji Garba Abubakar, at a forum with the Commerce and Industry Correspondents Association of Nigeria (CICAN) on Friday in Abuja.

What the Registrar General of CAC is saying

Abubakar in his statement said that once a document is submitted by accredited lawyers or certified secretaries (customers) on behalf of a company, the commission presumes that those documents are regular and the person that submitted has the authority to act in that capacity.

He said,

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  • If anybody makes any mistake or false declaration or submit any information that is false, that person will be liable to two years imprisonment upon conviction. We advise our customers to ensure they have proper authority to make filings on behalf of companies that engage them. If there is any wrong information or any misstatement in the document submitted, they will be held responsible.’

Abubakar also pointed out that, as part of new regulations to support the new Companies and Allied Matters Act 2020, (CAMA), the new system has placed a lot of responsibilities on the persons submitting documents on behalf of the companies.

What you should know

  • In a bid to improve on the ease of doing business, attract investment and ensure economic growth, President Muhammadu Buhari signed into law the CAMA 2020 in August 2020, to replace the CAMA 1990.
  • It should be noted that the new CAMA 2020 is not an amendment of the old act but rather a re-enactment.
  • The Minister for Industry, Trade and Investment, Adeniyi Adebayo, approved a draft regulation to support the implementation of the new CAMA in December 2020.
  • Also, CAC had given registered companies until April 1 to revalidate their various information and accounts or face sanctions.

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Spotlight Stories

MTN, NB keep Nigerian stocks up, investors gain N112 billion

UACN (+10.00%) led the gainer’s chart today, while ARDOVA (9.84%) was the top loser.

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Nigerian bourse extended its positive rally at Friday’s trading session, appreciating further by N112 billion, amid increased buying interest. Specifically, the market capitalization inched higher by 0.52% to close at N21.530 trillion from N21.418 trillion on Thursday.

In the same vein, the All-Share Index garnered 0.52% to close at 41,176.14 compared with 40,963.14 on Thursday.

Consequently, the market breadth remained positive with 42 gainers relative to 12 losers. UACN (+10.00%) led the gainer’s chart today, while ARDOVA (9.84%) was the top loser.

  • Also, the total volume of shares transacted improved with an exchange of 666.60 million shares worth N6.39 billion in 6,980 deals.
  • JAPAULGOLD was the most traded shares by volume with 115.8million units, while GUARANTY and ACCESS topped by value at N1.27b and N461 respectively.

Top Gainers

  1. UACN up 10.00% to close at N8.25
  2. FLOURMILL  up  9.33% to close at N32.8
  3. NB up 3.36% to close at N60
  4. PRESCO up 2.78% to close at N74
  5. MTNN up  1.19% to close at N170

Top Losers

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  1. ARDOVA down 9.84% to close at N19.7
  2. MAYBAKER down 5.71% to close at N3.63
  3. STERLNBANK down 1.96% to close at N2
  4. ZENITHBANK down 0.38% to close at N26.3
  5. UNILEVER down 0.37% to close at N13.45

Outlook

Nigerian Stocks ended the trading session on an impressive note.

  • The uptrend was driven by price appreciation in large capitalized stocks among which are; UACN, Flourmill, MTN Nigeria Communications, NB and PRESCO.
  • Nairametrics, however, envisages cautious buying as the COVID-19 crisis seems to be getting out of hand in Nigeria’s key international markets that include Western Europe and the United States.

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