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“Agribusiness is the mainstay of our economy”

Interview - July 31, 2012
Upper Reach speaks with Tunji Owoeye, Managing Director, and Akin Ogunbiyi, Executive Director, of Nigeria’s Elephant Group, a wholly Nigerian group of companies active in the import, distribution and marketing of fertilisers, wheat and rice

The last Nigerian presidential elections were deemed to be the most democratic so far, and hopefully they have paved the way towards a steadier and more transparent and hopefully fruitful development of the country. President Jonathan has actually undertaken an ambitious transformation agenda and set clear goals for the development of the nation. How would you evaluate the improvement in the collaboration between the public and private sectors when striving to achieve those goals?

MR. T. OWOEYE: As a private sector company in the agric business in Africa, we welcome the president’s transformation agenda. Since the new government started, policy structures have been developed. But there are limitations as to how far we can go at the moment, because of non-existent infrastructure. We have seen that government is interested in supporting the efficiencies of value churn in agriculture but wanting to cease being an off taker/buyers for the agro input getting involved in value chains, particularly agro inputs such as seedlings and fertilisers for the food chain.
Since this government came into power, they have not been part of the procurement and they have left it to the private sector. That gives the serious operators in this business the opportunity to integrate and expand the market and put themselves out there and gain more market share. We need government to work much more closely with operators in order to develop the value chain together. Within six to eight years, we can get to our destination but not within the tenure of the present government.

Agriculture in Nigeria is a major part of the economy, providing employment opportunities for over 70% of Nigerians. It is becoming a lot more commercialised. What can companies such as your subsidiary, Agrocorp, do in order to make agriculture a major contributor to GDP?

MR. A. OGUNBIYI: We already have a lot of programmes laid out in that respect. To some extent we are specialised in products. We do agro inputs as well as agro products i.e. rice. Right now we are more involved in importing rice, but we are vigorously looking at supporting the transformation agenda of the government with backward integration. Right now we are doing a lot of agro programmes at the farm levels in all states. We are sponsoring and financing farmers at the farm gates to encourage further processing. The government is determined to discourage the importation of rice, so that as a consumer nation, we do not just consume what other parts of the world produce. What we produce is not sufficient for consumption for the population growth we have. The government is focused on encouraging the production and processing of rice specifically.

Elephant Group and our subsidiaries are determined to support this. We are moving to the next level by establishing processing mills, where we will process resources into finished rice products. Ultimately, we will stop importing rice, and that is what we are working on. We expect government to do a little more on the production side in terms of creating an enabling environment for production to take full swing. The Government is doing a little, but it can do a little more, and these are the expectations we have. The Federal Ministry of Agriculture is providing seedlings and fertilisers at subsidised rates through agro dealers and they are working towards giving subsidised fertilisers like government used to do, but we are removing the bottlenecks that we used to have. However, we believe that this can be perfected. We have to take the first step though, which is avoiding the pitfalls on the past, where people just fed off the system without producing tangible results. Right now we are confident that if we perfect the existing system, we can actually get to the Promised Land.

We will need foreign investors to get involved in this area, because we need expertise and a financial support base. We need foreign partnerships along the value chain.

Do you think the government is doing enough?

MR. T. OWOEYE: We have taken steps towards engaging extension officers all over the country. In Nigeria there are 36 states and the federal territory (FCT), but our company has engaged two extension officers in different states. The aim of this is to coordinate local farmers and integrate them into cooperatives and give them regular training and provide seedlings for them so they can have the uniform harvest. We support them through the cooperatives in all the states and we give them seedlings free of charge. We are going to move them from being subsistence farmers to commercial farmers. We have done this in almost all states of our federation. The farmers are happy; they have more money in their pockets. We want to ensure that as a company, we are giving back to society. By formulating a network across the value chains of production, processing, packaging and distribution.

The first step is to look at CSR (corporate social responsibility) programmes. The benefit for this company is that we have been able to empower more people and we have been able to increase production. We are an input company, so they have increased production and yields, and they are able to take care of themselves. At the end of the day, we will be able to put them all together and process them and convert it into finished products via backward integration. Whichever way you look at it, it is a win-win situation for us.

We see ourselves as Africans with an objective to empower Africans and train and develop African entrepreneurs, especially in agribusiness. Nigeria has the third largest population in the world after India and China, and because of that, we believe that as entrepreneurs and as a company that if you do not support and empower the people around you, then you cannot say that you have genuine success. For instance, you can’t say that you are comfortable, my family is comfortable and we do not have any problems. Because of that, we have taken it upon ourselves to employ as many people as we can, not only in Nigeria. We have offices in Ghana, Cameroon, Niger and we are reopening our offices in Togo and Benin and other sub-region of the continent. Our business is across Africa and we ensure that we empower people and have more food on the table. As we assist African people, we also get better values in terms of funds and expanding the company.

Can you discuss the importance of diversification in a volatile environment such as this, where you do need to diversify in order to survive?

MR. T. OWOEYE: Over the past 12 to 13 years, we have operated in other sectors of the economy, but since the beginning of this government’s tenure, we sat down as a company and felt that we wanted to concentrate more on the agribusiness and focus less on oil and gas and construction. That is what we have actually done. For those who see our books and our financials, you will see that oil and gas, construction and other sectors are insignificant – less than 2% of our financials. And as the days and years go by, we want to eliminate them from our books and concentrate more on agribusiness, because we believe it is the mainstay of our economy and that is what everyone is going to go back to, and we know that we cannot go wrong with it by the Grace of God.

Where are you planning to position your company within Nigeria in the long-term?

MR. T. OWOEYE: At the moment in the short-term, we are one of the major companies in the industry. In the medium to long-term, we should have completed a backward integration programme in terms of having local industries for the products that we import. We intend to replicate this in viable African countries. 

MR. A. OGUNBIYI: We aim to focus on one country after another. We have set up in Ghana and Cameroon. We are already in western central Africa and we are looking to go to Gambia, Sierra Leone and North Africa. We are focusing on Africa. We have also decided to focus on and specialise more on agribusiness. We have realised that so much is happening in the oil and gas sector and so many people are focused on it, but the transformation agenda’s objective is actually to develop the oil and gas sector as well as other non-oil and gas sectors so that the economy can grow. We have a fertiliser plant project where we intend to set up a urea plant and NPK blending plant. We will be producing for local consumption, but we will also explore the export market as well, especially for Africa and the African countries in which we operate.

In the long-term, we have a programme of about 100,000 hectares of farmland to be cultivated in Nigeria. We are financing the farmers to supply our inputs. The second phase of the programme is for us to start with the 100,000 hectares of farmland to cultivate the processing from our own processing mills. The fertiliser plant will also be there to serve as a source of input for the farms, and other farms in Africa.

International banks support very viable businesses in Africa. We are working seriously with some of them and we have been growing with some of them. We are working with some international financial advisors like KPMG and Ernst and Young, and we are working on models that can transform not only our company, but also our vision.

You are also a member of the Nigerian national think tank, which is an NGO (non-governmental organisation) that aims to set up a plan for the development of Nigeria. Could you please tell us a little more about that programme and if it has had a tangible impact on Nigeria so far?

MR. T. OWOEYE: It is a private initiative that was set up irrespective of the government in power to look at areas of development, bringing in private heads together in order to develop a road map for this country. I think over the past six to eight years we have had a lot of deliberations as to how to move the country forward and the think tank from time to time have made suggestions to government as to how to move forward. The Nigerian think tank cannot enforce the inclusion of resolutions in policy programs, but in recent years, some of our proposals have been taken into consideration. For instance, the transformation agenda has been part of some of the think tank’s resolutions over the past eight years. I believe that as time goes by, this country will reach a level where most of the policies will come from these committees.

What would be your final message to the readers of The Times?

MR. T. OWOEYE: Nigeria is a very viable country and we believe in this country and in Africa. It is a country to invest in and make decent returns. We believe that most of the negative news about Nigeria are just campaigns to discourage investors, and it is a place that investors should come. The people are very warm and there is a lot of money to be made. You can develop good partnerships in Nigeria; you just need to know who to go to.

MR. A. OGUNBIYI: The company is focused on Africa. We are focusing more on Africa being able to feed itself. The world today has witnessed a situation where there are serious problems when it comes to the ability of most countries to feed their populous, especially because of the rising costs of food worldwide. Food scarcity is an endemic problem, and if Africa does not take on the challenge today, we might find it difficult to feed our citizens. That is what Elephant Group and a number of other private entrepreneurs in Nigeria have decided to tackle. We have decided to focus on Africa feeding itself. Entrepreneurs will surely make money in the process.

MR. T. OWOEYE: We also believe that we should take our destiny in our hands and take the bull by the horns. We want to provide food and agro inputs for our people.