'It is from a small seed that the giant Iroko tree has its beginning.'
This Yoruba proverb sums up the potential impact of agriculture on Nigeria’s economy if nurtured properly. Nigeria’s population is increasing at an incredible rate, raising questions about food and environmental security. Even as this forces the government to think innovatively about how food is produced and distributed, the sector’s potential to create jobs and further diversify the economy remains equally apparent. As a result, agriculture has received substantial investment from the government, aimed at boosting production through mobile technology.
Why is mobile technology important?
For many farmers in rural areas, data is a significant challenge as they are unable to secure access to timely and relevant information regarding production and finance. This restricts the government’s ability to adequately assist producers. Mobile technology presents a solution by providing farmers with information on production levels, weather estimates and finance. Information of this nature empowers producers, enabling them to become more efficient.
One benchmark case study of government-mobile intervention is the Electronic Wallet ("e-wallet") System introduced in 2012 by Dr Akinwumi Adesina, the previous Minister of Agriculture. With support from both federal and state governments and in partnership with Cellulant, a digital payments service provider that prompts, collects, settles and reconciles payments in real time, the ‘Growth Enhancement Support Scheme’ (GESS) was born.
GESS, the Impact
The scheme seeks to eliminate challenges related to the distribution of financed agricultural inputs, such as fertilisers, seeds and agrochemicals. The GESS does this through subsidised electronic vouchers which enable inputs to be delivered directly to farmers using mobile GPS technology. The vouchers are used like cash to purchase the inputs directly from agro-dealers.
As part of the GESS, Cellulant has spent the last four and half years building up an e-wallet that stretches over 774 Local Government Areas (LGA’s) and 95,315 villages, serving 17 million farmers and 2,714 agri-business across Nigeria.
These figures show the scope of the technology, and more importantly, its acceptance rate. Of these, 75% of the farmers who are active users of this digital finance service and accept direct subsidies that cut the cost of fertilisers by half. Such a significant reduction in the cost of fertilisers – a key production input – has improved scalability smallholder farmers. The GESS program also ensures that farmers can access grants directly, using mobile phones as a platform to buy and sell.
In contrast, a previous government scheme was only able to reach 11% of smallholder farmers and failed to make an impact in production cost, despite an increase of ₦180 million in government spending. The comparison between the two schemes highlights the government’s ability to capitalise on mobile innovation to increase its engagement levels, which is unsurprising given the increasing level of mobile penetration in Nigeria.
Agriculture beyond GESS
Nevertheless, challenges still exist. Droughts, deforestation, land conflict and corruption, all negatively affect the sector. Desertification, in particular, has been a topic of discussion lately due to recent conflicts over land acquisition between Muslim herders escaping rapid desertification in Northern Nigeria and Christian farmers in the south. Thus, amidst government efforts to boost production, environmental stability must always be considered.
Then again, in assessing the success of the scheme, we cannot ignore the fact that it has met the governments objective to increase food production. Between 2012 and 2015, production increased by an average of 21 million metric tonnes each year. During that same period, agriculture GDP expanded by 11%, according to the National Bureau of Statistics. Last year, it was the only major sector to avoid recession.
Its worth noting that the GESS cannot be considered the sole driver of the recent growth in agriculture. Another critical initiative, the ‘Anchor Borrowers Programme’, focuses on expanding low-cost credit to farmers. To support this, the Agricultural Credit Guarantee Scheme Fund guarantees loans given to farmers by 75% of the face value of the credit facility. Meanwhile, import substitution has also had a significant effect. The depreciation of the naira, as well as Central Bank of Nigeria restrictions on who can access foreign exchange, have instigated a shift towards local production. More directly, higher taxes on agrarian goods have stimulated demand for local produce. Together, these have boosted domestic supply through credit expansion and directed demand to sustain it.
Mobile as a part of the matrix
In assessing the impact of the scheme, it is vital to look at all sides of the spectrum. Has the scheme had a positive impact on agriculture production? Yes. But mobile innovation cannot be seen as a cure-all. Though the scheme can help drive market effectiveness and welfare, it needs to be supported by complementary investment in infrastructure and institutions – electricity, roads, literacy, etc. – to be sustainable.
Nevertheless, with the growing development in mobile technology, it would be interesting to see the future impact this would have on the sector, primarily in growing the industry.