Goodluck Jonathan’s Legacy, Nigeria’s Prosperity (1)

Four years into the Presidency of Dr. Goodluck Jonathan, it is no longer news that Nigeria is now Africa’s largest economy after a GDP rebasing that recalculated and recalibrated the constituent parts of our economy and showed that Nigeria’s 2013 nominal GDP was $510 billion, 80% higher than previously reported.

This makes Nigeria the 26^th largest economy in the world, surpassing not just South Africa (with a GDP of $356 billion as of 2013) but also Austria, Venezuela, Columbia, Thailand, Malaysia and Singapore.

According to Aurelian Mali, VP-Senior Analyst at Moody’s, the credit rating agency, Nigeria is expected to be among the world’s 15 largest economies by 2050, when its GDP is projected to exceed $4.5 trillion in purchasing power parity terms.

Jim O’Neill, former Chairman of Goldman Sachs Asset Management also shares this opinion with his belief that Nigeria has a better chance to be in the top 15 by 2050 than in the world’s top economies by 2020.

For a country that has seen its fair share of dark days of truncated democracies, absolute military dictatorships, coup d’états and political assassinations, this is a welcome development and a sign of many good things to come.

Nigeria’s massive population, growing economy and wealth of natural resources provide a vast opportunity for national development and expanded economic cooperation.

In the past four years under President Goodluck Jonathan, Nigeria has witnessed an unmatched and aggressive infrastructural development revolution across the country to fix decades of decay, wastage and malfeasance.

Railway Sector Transformation

Passengers who commuted via the country’s railway declined from more than 11 million in 1964 to far less than 3 million in 1991.  Freight movement also suffered a decline from more about 3 million tonnes in 1964 to less than 100,000 tonnes in recent times. Less than 10% of the nation’s entire wagon and coach stock were serviceable by 1991.

Under President Jonathan, Nigeria’s railway transportation sector has seen an unprecedented turn around with the aggressive rehabilitation of more than 4000 kilometers of rail tracks across the country and the extension of rail lines to virgin areas.

It is envisaged that more than 6000 kilometers of new and standard gauge rail lines will be constructed across the country.

The 186km Abuja – Kaduna high-speed rail line has reached 85% completion and will be commissioned before the end of 2014. It is one of the first Standard Gauge Railway Modernization Projects (SGRMP) undertaken in Nigeria. The project currently employs about 4000 Nigerians and will create more than 5000 operation and maintenance jobs upon completion.

The Abuja-Kaduna line is the first segment to be implemented as part of the Lagos – Kano Standard gauge project.

The next segment is the 312km Lagos-Ibadan rail line. This is a double track standard gauge line scheduled for completion in 2016. A $1.53bn contract was awarded to Chinese CCECC in August 2012 to deliver the project in four years.

The other standard gauge rail line projects which are now at advanced stages of project award include the Coastal Railway Line which includes: the Lagos – Benin City (300km), the Benin – Abakiliki (500km), and the Benin – Obudu Cattle Ranch (673km). Others are the Lagos – Abuja high speed (615km), the Zaria – Birni Koni (520km) and the Port Harcourt – Maiduguri line (1,657km).

In May (2014), Chinese railway construction giants signed a $13.1 billion deal to build the Lagos – Benin – Obudu Cattle Ranch high-speed rail project with a length of 1,385km in one-way mileage and with a design speed of 120km/h.

The new high-speed rail line will pass through 10 states across the Niger Delta. Twenty-two railway stations will also be built.

The rehabilitation of 1,300 kilometers of narrow gauge railway track from Lagos to Kano has been completed and service has long commenced.

The Port Harcourt – Maiduguri rail line has reached advanced stages of completion and will be commissioned in the next few months.

In June (2014), President Jonathan, represented by Vice President Sambo, commissioned two Diesel Multiple Units (DMUs) and six 68-seater passenger coaches, all air conditioned, acquired by the Nigeria Railway Corporation (NRC) from China, as part of infrastructure meant to further enhance the revitalization of the country’s railway system.

The new DMUs are expected to free up the number of heavy locomotives being used for passenger services and enable them to be used to pull freight wagons.

The introduction of this new equipment is expected to increase the number of passengers from 6000 to 7000 per week. It is also expected to result in a drastic reduction in congestion in the trains.

The Itakpe – Ajaokuta standard guage line has been completed with the entire track completely overlaid. 25 new General Electric locomotives were also procured to boost service along the route.

In order to enhance the sustainability and durability in the rail sector, and to ensure that the railway sector never falls back to the kind of decay we saw in the past two decades, the Federal Government under President Jonathan has signed a Memorandum of Understanding with General Electric to establish a locomotive assembly plant and maintenance facility in the country.

In November 2012, the Chinese Civil Engineering Construction Corporation (CCECC) had also set up a Railway Technology Training Center at Idu to provide training for local railway management, operations, maintenance and workshops.

Road Infrastructure Transformation

Another legacy of the Jonathan Presidency is it’s ambitious Road Sector Development, which has seen an unprecedented construction, reconstruction and rehabilitation of new and existing Federal roads across the country.

It is on record that the pace of road construction in Nigeria today has never been witnessed before. This government is taking on critical road infrastructure across the country and is getting the job done.

President Jonathan’s administration inherited roads that were generally described as death traps as many Federal roads were at various stages of depreciation.

The story is different today.

From about 5000 kilometers of fair roads in 2011, today about 25,000 kilometers of the 35,000 kilometers of federal roads are now in good motorable condition.

Travel times have been considerably reduced between origin and destination. Costs of vehicle maintenance have been drastically reduced.  Accidents and road carnages have also been drastically reduced due to improved pavement design and construction, and economic activities on our roads are now better distributed with increasing profits for transporters and commuters. Many transport companies have in turn, reduced their fares in response to the remarkable improvement and expansion of the national road network.

The establishment of Subsidy and Reinvestment and Empowerment Program (SURE-P) helped a lot with dealing with the challenge of paucity of funds as additional funding was injected into selected projects in the road sector such as the development of four (4) key arterial roads across the six geopolitical zones of the country. These include the Dualization of Abuja-Abaji-Lokoja highway, the Kano-Maiduguri highway and the rehabilitation of Onitsha-Enugu-Port Harcourt Expressway, Benin-Ore Shagamu Expressway, Lagos-Shagamu-Ibadan Expressway as well as the construction of the new Loko-Oweto Bridge over River Benue in Nasarawa and Benue States and the early works on the 2^nd Niger Bridge in Anambra and Delta States.

A cumulative summary of projects in the six (6) geopolitical zones is provided below

The story of the Second Niger Bridge is an interesting one.

In 2007, a few days before his tenure as President elapsed; former President Obasanjo had flagged off a Second Niger Bridge project BUT without any contract or contract documentation on ground. It took President Jonathan to hit the ground and make it happen.

The East West Road is also seeing amazing pace of work and expected date of completion is sometime in 2015.

Agricultural Transformation

The President’s Transformation wand has also blown throw the Agricultural sector.

One of the biggest trends in African news today is that of Nigeria’s renewed commitment to agriculture and the benefits of such a move for our nation’s economy.

From a food self sufficient nation in the 1960s well known for its global position in major agricultural commodities, Nigeria found oil and became dependent on it. Soon we became a food importing nation spending an average of $11billion on importing wheat, rice, sugar and fish alone!

In 2011, President Goodluck Jonathan rolled out the Agricultural Transformation Agenda (ATA) based on an intense understanding of Nigeria’s immense agricultural potential.

Nigeria has about 84 million hectares of arable land but only about 40% of this is cultivated. We also have about 263 billion cubic meters of water – with two of the largest rivers in Africa. We have a cheap labor force to support agricultural intensification. With a population of about 170 million people, Nigeria is a huge market but unfortunately, we had become a market for imported food products and not ours.

President Jonathan recognized that while having potential on its own is great, no one eats potential. He understood that to unlock the potential of agriculture to once again drive the economy, Nigeria must embark on the rapid transformation of key agricultural value chains – from the farm to the table and begin to treat agriculture as a moneymaking business and not as a charitable development project.

The goal of the President’s Transformation Agenda was to add an additional 20 million metric tonnes (MT) of food to the domestic food supply by 2015 and stimulate the creation of at least 3.5 million jobs along the agricultural value chains by working to create ecosystems in which small, medium and large scale faming will not only co-exist but also flourish. A strategy was deployed to create value added products from stable crops – through an aggressive import substitution program and other policy reforms to accelerate food production and agricultural resilience.

President Jonathan recognized that for any agricultural revolution to succeed, farmers and agricultural practitioners must have unhindered access to modern agricultural inputs, especially fertilizer and seeds.

For decades, successive governments in Nigeria procured and distributed fertilizers. The system was corrupt and undermined the private sector. It did not deliver fertilizers to genuine farmers. Instead, rich and powerful political farmers hijacked the subsidized fertilizers and as a result, less than 11% of all genuine farmers in the country got the fertilizers distributed by the government.

Under President Jonathan, a more transparent and efficient distribution of fertilizer and high quality seed distribution regime was established against a previously corrupt distribution regime.

Within 90 days of the launch of the Agricultural Transformation Agenda, President Jonathan, bolstered by the efforts of his Minister of Agriculture, Purdue-trained Akinwumi Adesina, ended four decades of corruption in the fertilizer distribution sector. The Growth Enhancement Scheme (GES) was launched to provide subsidized inputs to farmers.

To ensure that fertilizers and high yield seeds were able to reach genuine farmers directly, the Ministry of Agriculture also developed the Electronic Wallet System (EWS), which allowed farmers to receive subsidized electronic vouchers for their seeds and fertilizers on their mobile phones. Nigeria is the first country in Africa, possibly in the word to develop the electronic wallet system for targeting farmers with subsidized farm inputs.

In 2012, 1.5 million small-scale farmers got their subsidized seeds and fertilizers using their mobile phones. In 2013, over 3.5 million farmers received their farm inputs via the Electronic Wallet System. Thus far, the GES system has been expanded beyond crops to provide support for fisheries, livestock and mechanization services. To reach even more farmers, the Ministry of Agriculture has embarked on the nation’s first ever registration of farmers. More than 10 million farmers were registered in 2013. Registered farmers now have identity cards that allow the Ministry of Agriculture use their biometric data to target them more effectively.

African countries, as well as Brazil China and India, have expressed interest in adopting the EWS for reaching their own farmers with subsidized farm inputs. Nigeria is now exporting transparency and our agricultural sector has moved into the 21^st century.

Nigeria is just about the largest importer of rice in the world. To deal with this challenge, President Jonathan set a target for Nigeria to meet self-sufficiency in rice production by the year 2015.

Last year, in one dry season, Nigeria produced over one million metric tonnes of rice paddy-one third of the additional rice paddy needed to become self sufficient in rice.

Large-scale commercial rice producers are also expanding the production of rice locally.

Dominion Farms Nigeria Limited, (a partnership between the Nigerian government and Dominion Farms, an Oklahoma based farming company) is investing $40m for a commercial rice farm in Taraba State that will be Africa’s biggest production at 300,000 MT a year. The $40m rice farm will reduce Nigeria’s rice imports by 15% and cut rice costs by N54 billion ($342m) a year.

Olam Farms, another private firm, has expanded it rice cultivation by 10,000 hectares.

In July 2014, President Jonathan inaugurated Olam’s 105,000 MT Integrated Rice Processing Mill in Rukubi, Nassarawa State.

Fourteen large scale integrated rice mills were established by the private sector in just two years, producing international quality long grained parboiled rice. Well packaged, long grained parboiled local rice is now available on the market and can be seen on the shelves of supermarkets, shops and shopping malls across the country where there are gradually upstaging their imported counterparts which are usually more than 10 years old and dumped on the Nigerian market.

To reduce Nigeria’s almost $4billion import bill on wheat annually, the Jonathan administration embarked on the Cassava flour substitution policy to replace some of the wheat flour used in bread and confectionaries. Today, several of the major Nigerian bakers have shifted to the incorporation of the 20% high quality cassava flour in producing bread.

Increasing commercialization of cassava bread will eventually reduce Nigeria’s wheat import bill by at least $800 million and put this money back in the pockets of Nigerian farmers, processors and bakers. To drive the production of high quality cassava flour, the Jonathan administration is supporting the private sector to access cheap financing to establish large-scale cassava processing plants. Also President Jonathan has established a $60m Cassava-Bread fund to scale up nationwide production and commercialization of cassava bread.

The Cassava Value Chain is being transformed. In Kogi state, Cargill, the world’s largest agricultural trader by volume, is developing 15,000 hectares of land.

Cargill’s proposed investment, according to informed published on the group’s website would be $100m to construct a cassava starch processing facility and support the development of local cassava, maize and soy agricultural supply chains over approximately 30,000 hectares to supply the processing facility. The starch facility will produce up to 90,000 metric tonnes (MT) of cassava starch to supply Nigerian food and beverage manufacturers. The investment would also set up an inclusive farming model that would enable small holder farmers to access training, crop inputs and a reliable, fair market for their crops.

In Kwara State, Flour Mills of Nigeria is establishing plants to turn cassava starch into sweeteners to reduce sugar imports. Thus far, Niger has secured a total of 3.2 MT of cassava chips for export to China. When concluded, this will earn farmers and processors over $800 million.

Unilever, the consumer good giant, also intends to set up a plant to process hundreds of tonnes of cassava roots into sorbitol, a key component in toothpaste. “We are looking at Nigeria because we have a factory there that produces toothpaste and a growing market, but we currently import sorbitol from China to make it”, a Unilever spokesperson said. “Our intention is to produce sorbitol that is globally competitive, not simply an import substitute for Chinese sorbitol.

Wheat production has also been a beneficiary of President Jonathan’s Agricultural Transformation Agenda (ATA). The Ministry of Agriculture has released new tropical wheat varieties that are heat tolerant and give yields of 5-6 tons per hectares, more than 500-600% the yields previously obtained by farmers. Over the next two years, over 450,000 hectares will be planted under these new wheat varieties across the wheat growing belt of Northern Nigeria. Nigeria plans to produce at least 2.5 million MT of wheat and reduce wheat imports by 50% in 2015.

The horticultural sector is also being transformed. Nigeria is the largest producer of pineapples and mangoes in Africa but imports concentrates from South Africa. We are the largest producer of tomatoes but we import tomato paste from China.

A 2011 study showed that Nigeria, Africa’s most populous nation pays $360 million to import more than 300,000 metric tonnes of tomato paste annually from companies including Hebei, China based Baoding Sanyaon Food Packaging Company and Singapore’s Olam International Ltd.

Nigeria produces about 1.5 million tonnes of tomatoes annually of which about 900,000 tonnes rot.

Dansa foods of the Dangote Group, another local private firm is investing $35 million in the establishment of a tomato processing plant in Kano.

Dansa Foods took up the project after a failed attempt to get importers, Olam, Conserveria Africana Ltd and Chi Group Ltd to form a venture. The plant will produce about 400,000 tonnes of tomato paste annually. Most of the tomatoes will be sourced from local farmers in Kano’s Kadawa valley who will receive guaranteed pricing of $700 per tonne compared to an average of less than $350 now.

Dansa Foods is also investing $45 million for the setting up of a 6000-hectare pineapple plantation and an 80 MT per day pineapple concentrate plant in Cross Rivers State.

Nigeria is also the second largest producer of citrus fruits in the world but we import orange juice.

All that is now changing. Teragro, the agribusiness subsidiary of Transcorp, a Nigerian company, has established a $6 million plant to process oranges into concentrates.

In Cocoa production, Nigeria experienced a 48% growth in cocoa production from 2011 (250,000 MT) to 2013 (370,000 MT) with earnings from export hitting about $900 million in 2013.

The target for Cocoa production is to double production by 2015. To achieve this, 3.5 million pods of high-yield cocoa hybrids have been distributed to smallholder farmers – all free of charge – in addition to support for production inputs. The private sector has expanded its processing capacity for value addition to cocoa beans. The vision is for Nigeria to be making high quality chocolates for Africa.

The impact of the Agricultural Transformation Agenda has been huge for Nigeria. In less than two years, Nigeria has already produced an additional 9 million MT of food. At the same time, our food imports have reduced by $5.3 billion with more than 2.7 million jobs created – 77% of the expected target.

(To be continued)

Written by George Kerley.

The Jonathan Legacy Project