WHY RICE IN NIGERIA?
NIGERIA HAS AN INSATIABLE APPETITE FOR RICE
• Nigeria’s population is expected to exceed 200 million by 2019, surpassing the U.S. as the third-largest country in the world in 2047, according to the projections
• Between 1990 and 2019, rice consumption in Nigeria increased from 2.7 to 7 million tons.
• Demand for rice is increasing at 5%+ per year.
• Nigeria was the largest effective rice importer in the world, until all land-border rice imports into Nigeria have been banned since January 2020.
Domestic rice production levels in Nigeria are a historical challenge, and fail to meet growing demand. This is due to a number of factors, including but not limited to:
• Lack of mechanisation
• Low average yields
• Lack of industrialised production at scale
• Weak socio-economic incentives for youth entering labour market to gravitate towards agricultures, as urban centres with service-based economies offer seemingly greater financial rewards, despite the much higher cost of living
Supply-side Challenges + Consumption Outpacing Domestic Production
The Nigerian Government and Central Bank of Nigeria (CBN) are Strongly Supporting and Enabling Local Rice Production
• Rice imports declined 33.3% reaching 2.7 million tons in 2017
• This decline has been attributed to reduced demand as a result of Government’s policies on import substitution – import tariffs and inclusion of rice in the list of 41 items ineligible for forex in the official market.
• Significantly, all land-border rice imports have now been banned since January 2020.
• The Governor of CBN has just announced a multi-trillion naira package to develop key infrastructure for the facilitation of agriculture and other sectors’ domestic supply chain. The aim is to increase self-sufficiency, especially given Covid-19., which the government and business leaders in Nigeria see as a unique opportunity to ‘reset’ Nigeria’s economic direction.
One of the most significant financial stimulus tools for the agricultural sector has been the Anchor Borrower Scheme run by CBN, whereby funds from CBN are released to commercial banks, who in turn make those funds available for farmers to procure inputs via to companies with ‘Anchor Borrower’ status – such as millers, processors, cooperatives – and Rice Mills of Nigeria will benefit from this scheme, as its sister company Africa Redcrest Nigeria, enjoys Anchor Borrower Status, meaning:
○ We can help farmers easily access finance for their harvests.
○ Stimulus to harvest and produce more rice.
○ Reinforcement of ARN Mill’s position in the rice value chain and the communities in which it operates, as a socio-economic catalyst.
○ Guaranteed access to paddy provisioning with farmers in the scheme.