#farouk gumel tgi

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Farouk Gumel - The Role of Agriculture in the Economic Development of Nigeria

Nigeria, like many Africa nations, is an agrarian nation. Contrary to the general perception that it is an oil and gas country, the majority of Nigerians in reality earn their living through the agricultural and food value chain. This should not be a surprise. A country with over 200 million people will surely have a large appetite. 

In this article, we are going to briefly look at how agriculture is one of the biggest reasons why Nigeria is the world’s 27th largest economy, and why investing in this sector will propel Nigeria  to greater heights globally.

The Truth About Nigerian GDP

Nigeria is the largest economy in Africa with the highest population on the continent. It was ranked the 27th largest economy globally and is among the largest producers of oil and gas in the world. 

The whole world knows Nigeria for its Oil while ignoring its other assets – arable land, water, solid minerals and ofcourse, its young and talented population. 

Oil is considered by many as the biggest contributing factor to the Nigerian economy, and to some extent, they are right. Oil reserves in Nigeria amount to 35 billion barrels and oil still remains the largest earner for the Nigerian government. Most of the oil is exported in crude form. There is little value addition locally this means only a few jobs are created locally.

So if oil is such a big factor in the Nigerian economy, then why is agriculture the main focus of this article?

Statistically, agricultureis a key factor of the Nigerian GDP. In 2019, agriculture accounted for nearly 22% of Nigeria’s GDP and employs more than one-third of the population. We have 14 million cattle produced in our countryand are the largest producer of cassava (59.4 million tons) and yam (47.5 million tons) plus major exporters of cocoa,  cashew, sesame and beans to mention a few. For local consumption, Nigeria produces maize, sorghum, rice, millet and wheat. It has a vibrant and fast growing poultry and fisheries industry. There have also been significant investments in vegetable oil refining in recent years. 

It is worth noting that as the oil and gas and many other sectors fell into recession in recent years, Nigeria’s agriculture sector continued to grow and create jobs.

What can be Done in the Future?

Just to be clear, Oil is and will remain a huge factor in the GDP of Nigeria, but to create a better and more inclusive economy, Nigeria needs to focus on its secret weapon,  agriculture which supports more than 70 million people in Nigeria, 

In the last 5 years,  the Nigerian Government and the Central Bank of Nigeria have pushed aggressive fiscal and monetary policies aimed at harnessing Nigeria's agricultural potentials. The policies, which target both small scale farmers and large scale corporates, have resulted in significant investments in Nigeria’s agricultural value chain.

TGI Group, through its numerous subsidiaries such as WACOT Ltd is one of the many private sector companies to participate in this latest push by Nigeria to put Agriculture to work.

WACOT Ltd has started up projects of new rice mills across Nigeria and employs over 9,000 workers both in blue and white-collar jobs. Its new rice mill which is speculated to be the turning point in Nigerian agriculture and will provide farming the boost it needs can store up to 120,000 tonnes of rice paddy and has the storage facility to keep that much raw produce for 6 months in advanced silos.

Farouk Gumel, executive director of Tropical General Investment (TGI) Group has rightly stated in an article that TGI/WACOT Ltd projects are made to take advantage of the new government policy direction and that the new WACOT Ltd rice mill will bring with it a lot of opportunities for the people of Nigeria. Farouk Gumel also stated that WACOT is planning to build two more rice mills in the coming years.

In addition to WACOT, many other well known brands are participating in Nigeria’s rice revolution. For example, Dangote Industries, intends to set up 10 rice mills in the coming years. Aliko Dangote, Africa’s richest man announced he is investing over $4 billion in farming and food processing in Nigeria. Olam in a recent press release also announced its plans to make more investments in food production and processingacross Nigeria. As these big names and many more continue to invest in food production, Nigeria’s agricultural sector may finally deliver its true potential.

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Nigeria hopes high tariffs will make it grow more rice

STANDING ankle-deep in water between neatly spaced rice plants, an instructor shows a group of about 100 farmers in Kebbi, a state in north-west Nigeria, how to apply herbicide. The training session, arranged by TGI Group, a Nigerian conglomerate that runs a large rice mill nearby, has an enthusiastic audience. Hussein Ahmed, a farmer, says the yield from his small field has increased by about 50% since he started using chemicals and carefully spacing the seedlings. Another farmer boasts of marrying a second wife thanks to the extra money he is earning from growing rice.

Across the region the grain is cooked with tomatoes and mounds of chili to make jollof, a dish that is almost always eye-wateringly spicy, no matter how mild the cook insists it is. Jollof is not just the cause of many arguments in the region—Ghanians and Nigerians each insist theirs tastes better. Its main ingredients have also become symbols of how Nigeria is trying to diversify an economy that exports crude oil and imports almost everything else.

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Muhammadu Buhari, who was inaugurated as president in May 2015 in the midst of an economic shock caused by low oil prices, turned to autarky. His central bank stopped providing foreign exchange to importers bringing in 41 categories of goods, including rice, toothpicks and incense. The government increased customs duties on rice from 10% to 60% in October 2016 to encourage farmers to plant more.

Such tariffs have certainly spurred investment in farms and in milling plants such as the one run by TGI in Kebbi. The mill can already produce 120,000 tonnes of rice a year, yet the company is planning to add another 100,000-tonne production line and open two more mills in other states in the next five years. Aliko Dangote, Africa’s richest man, says he will invest in six new factories that will produce 1m tonnes of rice a year.

To feed these mills, Nigeria will have to increase its rice yield, which is among the lowest in the world. Farmers in Thailand harvest three crops a year, compared with one or sometimes two in Nigeria. Outgrower schemes, in which firms such as TGI provide training, fertiliser and other chemicals on credit that is repaid after harvest, can help. But extending them to all 1.4m rice farmers in the country would be a huge task.

The central bank has done its bit by doling out some 55bn naira ($153m) in loans to 250,000 farmers (most of whom grow rice). Architecture graduates and civil servants have cashed in on the boom and taken up farming. Central-bank officials are happy to talk about how much money it has lent, but they do not mention how much money is being paid back. Nigeria’s anti-corruption body recently said that it had recovered 300m naira stolen from the farm-loan scheme in two states.

The bigger problem, however, is that local rice is still not competitive with Asian imports. Farouk Gumel of TGI says that in January he was selling 50kg bags at his factory gate for 14,000 naira each (traders then add on the cost of the long journey to cities in the south). Smuggled rice, on the other hand, was being sold in urban markets for 12,500 naira a bag. Thanks to increased production and perhaps smuggling, rice prices are lower now than they were a year ago, though they are still 68% higher than they were two years ago.

The government says its policies are working and that Nigeria will no longer need to import rice by the end of the year. But its numbers do not add up. It says that rice production has doubled since 2015 (and will increase by 50% again this year), but there are scant data to support such ambitious claims. Nigerians eat 5.3m-7m tonnes of rice a year. Imports account for 2m-3m tonnes, a figure that has barely budged in recent years (see chart). Nigeria’s information minister, Lai Mohammed, points to statistics from Thailand showing that its exports to Nigeria have slumped by 97% in two years. But Thailand’s exports to Benin, have doubled to 1.8m tons a year, the equivalent of 160kg per Beninese. The country’s tariff of 12%, and its poorly policed border with Nigeria are probably the main reason for its booming demand.

Nigeria’s import restrictions benefit farmers and millers and seem to be encouraging more planting. But until yields improve and the costs of producing Nigerian rice fall, the country’s consumers will have more reason to thank smugglers for keeping their plates filled with jollof.

This article appeared in the Middle East and Africa section of the print edition under the headline "Grow your rice and eat it"

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Farouk Gumel - Africa’s Agriculture exports and the need for more processing locally

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Farouk Gumel | Pushing Nigeria’s Biggest sector to its limits - Agriculture

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Farouk Gumel - A case for why oil should not be Nigeria’s No.1 Focus

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Farouk Gumel | Pushing Nigeria’s Biggest sector to its limits - Agriculture 

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Farouk Gumel | Pushing Nigeria’s Biggest sector to its limits - Agriculture

Farouk Gumel - Finally, agriculture is taking its rightful place as the sector that will take Nigerians out of poverty and into an era of inclusive and collective prosperity. Although the sector employs millions of Nigerians and accounts for an estimated 20% of the country’s GDP, many still view supporting agriculture as a charitable act as opposed to a business venture. This is the simple reason why many farmers in this sector are classified as “under employed” due to their mere inability to grow beyond the subsistence level. 

Nigeria is blessed as we have the potential to excel in all the key sub-sectors of agriculture. We have the land and forests for farming and grazing. We have the water (sea, lakes and rivers) for fishing and aquaculture. We have the capacity and the climate for livestock and poultry production. And of course, we have the manpower to get all this done. 

Therefore, it is extremely exciting for all of us to see significant investments going into this sector. We are witnessing a gradual but consistent increase in the production of cassava, yams, maize, paddy, millet, fish and poultry products. Our non-oil exports have also increased especially in cocoa, cashew and sesame seeds. This is all because Nigeria finally has alignment in its fiscal, monetary and trade framework when it comes to agriculture. Due to this, we are moving away from the days of handing out fertiliser and seeds to an era of providing loans to farmers and tax incentives to investors in food processing and logistics.  

Many organisations have bought into this new policy direction. One of them is TGI Group who in the last five years have commissioned a rice mill, a multi seed oil crushing facility and a seasoning cubes factory. They have also invested significantly in outgrower farming and farmer extension networks. Farouk Gumel, an Executive Director at TGI states “With an inclusive agricultural policy, Africa can feed itself and create millions of Jobs”. 

Farouk Gumel added “the fact that the majority of Nigerians earn their livelihoods through agriculture means the recent policy push will positively impact millions”.Farouk Gumel concludes that “TGI’s projects will bring with it a lot of opportunities for the people of Nigeria especially in the rural areas. We hope as these investments mature, they will bring peace and prosperity to millions of people”. 

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Farouk Gumel - A case for why oil should not be Nigeria’s No.1 Focus

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Farouk Gumel - A case for why oil should not be Nigeria’s No.1 Focus

Farouk Gumel - Oil was discovered in Nigeria in the 1950’s and today, Nigeria is the eleventh-largest oil-producer in the world and Africa’s main oil producer. In 1977, the Nigerian National Petroleum Company (NNPC) was founded to participate and regulate the country’s oil sector. Since then, significant progress has been made in terms of increasing production, revenues, and consumption. We must thank NNPC for Nigeria’s dominance in Africa when it comes to oil production. This dominance however came with its downsides. As a nation, Nigeria became over reliant, or one could even say addicted, to oil revenues. 

From the 1970’s, we convinced ourselves that Nigeria is rich. And maybe we are. But the reality is poverty has always been around growing side by side with our oil production and the apparent wealth. This is because as oil brings revenues to a nation, it does not create jobs in a nation. According to the International Labour Organisation (ILO), the petroleum industry directly employs 6 million people.This is less than 1% of the global labour force. 

In the last decade or so, global oil prices have been extremely volatile. Many oil producing nations have seen their incomes drop significantly as average oil prices continue to drop. The apparent wealth of many oil producing nations suddenly disappeared. Countries who were smart enough to save started dipping into their savings. Those who invested started selling assets to make ends meet. We also saw a few who simply ran out of money and were unable to pay salaries or service their debt. The concept of “oil rich nations” quickly changed to “struggling oil dependent economies”.

Today, the 13 countries that make up the Organisation of the Petroleum Exporting Countries (OPEC) have a combined population of approximately 500 million people. Nigeria accounts for 208 million or 40% of this population.So clearly, we are an outlier and we must consider this as we plan for our future.  

Although Nigeria, as a country, has been adversely impacted by the decline in oil prices, it remains a going concern and has been able to meet most of its international and domestic obligations. The country has, in recent years, aggressively pushed to move away from reliance on oil. We simply have no choice especially as the oil sector only brings revenues, it does not create massive jobs! According to the ILO in 2005, the Nigerian oil industry employs less than 315,000 people (direct and indirect).

Farouk Gumel, the Group Executive Director said “Nigeria looks to the agriculture sector to decrease oil dependency”. He adds that “agriculture recorded a steady growth even during the country’s recent recession. It is becoming the largest Economic sector in Nigeria and this is helping to improve Nigeria’s GDP.Furthermore, agriculture is the only sector that has the potential to create massive jobs”. In a recent interview Farouk gumel added,”Nigeria hopes strong fiscal and monetary policies will further encourage additional investments in the agricultural sector”. 

Farouk Gumel said TGI Group is already investing millions of dollars in out grower farming programs for rice paddy, soya beans and maize in Nigeria. “These programs supply raw materials to TGI’s rice mill, multi seed oil crushing facilities and poultry farms.” He added. TGI also gives guaranteed offtake agreement to the farmers. These offtake agreements enable the farmers to borrow funds for the enhancement and expansion of their operations. He concludes that “Agriculture is the key to inclusive and sustainable economic growth thereby leading to long term peace and prosperity”.

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With an inclusive agricultural policy, Africa can feed itself and create millions of Jobs by farouk Gumel

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With an inclusive agricultural policy, Africa can feed itself and create millions of Jobs by farouk Gumel

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Viewpoint: The Future of Work in Agri-Food – Farouk Gumel

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Farouk Gumel, Executive Director of the TGI Group, says his organisation has already implemented strategies to ensure there is a proper balance between man versus machines when it comes to Agriculture.

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Viewpoint: The Future of Work in Agri-Food - Farouk Gumel

Farouk Gumel, Nigeria- In this technology driven world, we are gradually seeing every aspect of human life being influenced by technology. This has changed the way we see and do things.

The agricultural sector is not any different. On a daily basis, we learn of new technologies that support farming, storage, processing, logistics and sales. This is very exciting for the sector which, at least in Africa, has been very slow to modernise. The question however is how can we transition to ensure we fully harness the benefits of modern agricultural practices while managing its inherent risks?

The Technological Advancement in Farming

State of the art technology and science-based farming practices undoubtedly bring higher yields, more efficient production, better quality produce and enhanced profitability. 

In developed and/or sparsely populated nations, farming machinery is preferred as they are more efficient and cheaper. The automation of planting, irrigation and harvesting has helped most developed nations sustain their agricultural sector. In some places, the technology is complemented with migrant farmers. 

However, as developed and low population nations celebrate the positive contributions of technology in agriculture, many commentators overlook the 2 billion people, most of whom are in developing nations, who depend on the traditional farming practices for their livelihoods. This is 25% of the world population! 

It is safe to say that today, the backbone of African farming remains the rural farmer ably assisted by his farm animal. Yes, it is backbreaking work, but in many instances, it is the only profession they know. This ecosystem will simply be crumpled with immediate and rapid automation. A single tractor, for example, is a direct competitor to maybe 7 rural African farmers when it comes to ploughing, planting and harvesting. 

The COVID-19 pandemic has created a new sense of urgency for increased application of technology in our day to day activities. This push for a human-less AI-driven experience should be well thought through…especially as it relates to Africa. 

To be clear, it is not a case of “Man Versus Metal” where the winner takes it all. Without technology, Africa’s agricultural sector and its output will be inefficient, uncompetitive, expensive and inadequate to even meet the needs of its growing population. At the same time, without the traditional farmer, Africa's rural economy will collapse leading to higher unemployment and eventual insecurity. 

What can be done?

There is a need for policy makers to formulate a plan that will integrate the traditional farmer into modern agriculture. The transition can be managed but the thinking needs so start now. This must be coupled with issues around climate change and desertification which is also adversely impacting Africa’s food security.

Farouk Gumel, Executive Director of the TGI Group, says his organization has already implemented strategies to ensure there is a proper balance between man versus machines when it comes to Agriculture. Although TGI’s factories use the most modern and up to date technology, their supply chain remains in the rural economy working with out-grower farmers.  But according to Farouk Gumel, TGI’s corporate sustainability strategy goes beyond TGI’s out-grower programs and includes programs such as “Farmer Business Schools” where they support farmers and their families to diversify their income sources. Furthermore, TGI has been recruiting and training some of these farmers into their factories. These types of programs, Gumel says, will hopefully safeguard livelihoods in Nigeria’s rural economy during the inevitable transition from traditional to modern agriculture.  

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Farouk Gumel - The Role of Agriculture in the Economic Development of Nigeria

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Nigeria, like many Africa nations, is an agrarian nation. Contrary to the general perception that it is an oil and gas country, the majority of Nigerians in reality earn their living through the agricultural and food value chain. This should not be a surprise. A country with over 200 million people will surely have a large appetite. Farouk Gumel, the executive director of TGI, said about Nigerian GDP and How Nigeria’s farming improving day by day.