The liberalization of credit, taxation and investment possibilities for large scale commercial farming has been extended by the current military government. Commercial and merchant banks have been directed to commit more of their loan portfolios to agriculture. Interest rates have been increased to encourage lending, but grace periods for borrowers have been lengthened, with tree crop farmers and ranchers benefiting most. A long with such measures the scope of the Agricultural Credit Guarantee Scheme is being expanded. Fiscal incentives include a three year income tax holiday for new agribusiness and the exemption of agriculture machinery and equipment from import duty.
Inducements for foreign companies are even greater. The Ministry of Agriculture is to set up an Agricultural Investment Bureau to give investors advice and guidance, and the government has repeatedly hinted at increasing the amount foreign companies can hold in agricultural ventures, but it seems to be moving away from such a move. But many economic analysts are skeptical that these incentives will encourage the kind of investment capital
The government’s recent attempts to encourage investment, however, are prompting some foreign firms and Nigerian entrepreneurs to look more closely at the profitability of agribusiness. Perhaps more important in the long term, there also appears to have been a significant shift in the pattern of foreign involvement, back to direct investment in cultivation. After independence, many foreign companies in
Such consulting arrangements continue to be profitable, but now, with the climate becoming more attractive for foreign capital, multinationals are looking once more into the possibilities of direct investment in farming. The United Africa Company (UAC), a subsidiary of the Anglo Dutch conglomerate Unilever, has recently announced that it is to invest around $28 million in agricultural projects. The most important is an investment of just under $17 million in oil palm cultivation, marking UAC’s return to one of its principal activities before independence. Existing oil palm estates are to be rehabilitated and new sites developed. UAC is also to produce maize in
And, Nigerian manufacturers with multinational links are moving into agriculture out of necessity in order to substitute local products for previously imported raw materials that are now impossible to obtain because of import restrictions. Coca-Cola the franchise holder of the Nigerian Bottling Company (NBC), part of the Leventis group, is to produce fructose from maize grown on an 11,000 hectare farm in Bendel state. Around $50 million is to be invested in the project, which will supply NBC’s fourteen Coca-Cola bottling plants and produce glucose, starch, corn oil and animal feeds as by-products. John Holt, Nigerian associate of the U.K.-based multinational Lonrho, is also looking into starch, fructose and glucose production from maize grown on two large sites in
In the past, peasant farmers were thrown off their land under agribusiness schemes, and there are fears that this “dispossession” may accelerate and a class of landless laborers will be formed. At best, it is argued, small landholders may become mere “outgrowers” managed by commercial concerns and then required to supply their crops to the managers, much like a sharecropper. Such developments have yet to occur on a mass scale, but already peasant communities have been disrupted by the construction of dams under the RBDAs, in which multinationals are heavily involved. For example, Impresit, the construction arm of the Italian firm Fiat, designed and built the controversial Bakalori dam, centerpiece of the Sokoto-Rima River Basin Development Authority’s irrigation complex in Sokoto state. At a cost of $550 million, the complex was supposed to irrigate 30,000 hectares for the cultivation of wheat, rice and other crops.
Some 4,000 peasant families-about 15,000 people were displaced when work began on the project in 1975. Some were resettled in badly serviced towns and villages, and many were without access to land and had to sell off their livestock to survive. Others were forced to migrate to find work and some were taken on by the contractors. When construction was completed the irrigated land was reallocated to the original holders, but the large debts that they had accumulated while without land stopped many from farming their plots. Much of the developed land was then taken over by scheme staff and absentee farmers from the towns.
Farmers’ protests over this disruption came to a head in 1980 when they blockaded the dam site to press for adequate compensation. Construction work was halted until the police forcibly broke the blockade after a gun battle which left at least nineteen people dead. Besides those in the project area, peasant farmers downstream from the dam have been badly affected by the scheme. The possibility of dry season farming on 20,000 hectares of “fadama” land inundated during the rainy season has been removed since the dam was built; peasants impoverished downstream by this far outnumber those benefiting from the irrigation scheme. As they are completed and come into operation, other large-scale irrigation projects under the RBDAs are creating similar problems; yet, despite much protest, they continue to be created. Around $2.2 billion was spent on RBDAs between 1982 and 1985 and the current military government has created another eight authorities, making one in each state of the federation, except
World Bank involvement in Nigerian agriculture is ostensibly less harmful. The ADPs have made some advances in raising food production and in improving the water supply and other parts of the country’s infrastructure in rural areas. But the projects also have major shortcomings. Although it is true that federal and state contributions have plummeted since the early 1980s, forcing many ADPs to operate well below target, many of the ADPs problems can’t be blamed on inadequate funding. In fact, cost overruns have been reported in much of the construction work. A more important aspect of World Bank involvement is the effect its free market orientation is having on peasant farmers. The Bank’s insistence on opening procurements up to international tender means that Nigerian producers are becoming more and more dependent on imported materials and technology. Rural inequality is therefore exacerbated since only the better off can afford such items and subsidies are frowned upon. Foreign suppliers and distributors are of course the beneficiaries of the growing dependence on imports. Fertilizer distribution, for example, is to be handled by the private sector because of the inefficiency of state agencies – less than half of this year’s requirements are likely to reach the farmers. The
As well as assuring future markets and contracts for foreign companies, World Bank involvement in agriculture is also greatly deepening
Foreign involvement in Nigerian agriculture is undoubtedly accelerating. The climate for foreign investment is becoming more amenable as the Nigerian economy is restructured under the watchful eye of the IMF, World Bank and international banks despite the lack of a formal agreement. Bureaucratic obstacles to foreign investment still persist-earlier this year five
The full consequences of the new commercial agriculture for