1 Agricultural Value-Chain Development: The Place of Transport Infrastructure and Transport Projects...
Transcript of 1 Agricultural Value-Chain Development: The Place of Transport Infrastructure and Transport Projects...
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Agricultural Value-Chain Development:The Place of Transport Infrastructure
and Transport Projects
Raj Kulasingam
Nigeria Development and Finance Forum 2012 Conference24-25 May 2012London
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About SNR Denton
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Our Locations
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The conundrum….
“The price of food in Nigeria suffers greatly from high transportation costs. Limited rail service, poor road
conditions, ’go-slow’ bottlenecks, and informal checkpoints all contribute to reducing the competitive
trade of agricultural goods produced in Nigeria. The Port of Lagos experiences severe congestion which may cause
ships to be docked for up to 20 days, and containers to be delayed for as long as 35 days. The most important
transportation route in Nigeria, the Lagos-Niger corridor (LNC) is a 1,149km road that sees a large amount of traffic:
between 5,000 and 17,000 vehicles per day, 10-14% of which are heavy vehicles. The neglected railway is no
longer useful to ship goods within or between countries.”
USAID Global Food Security Programme
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Agriculture is like…..
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Computers …….?
1976, Steve Jobs opened his parents' garage to sell his first ever Apple computer. Called the Apple-1, and it was sold for a $666.66 per unit
Apple-1 auction in 2010 for $240,000!
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Overview
Statistics
Issues
Transport infrastructure
Food Corridor
PPPs
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Agriculture in Nigeria – the statistics
Employment for 70% of the population 45% of Nigeria’s GDP 30.7million hectares (76m acres), or 33% of Nigeria’s land
area, are under cultivation 50 million involved in agriculture 2010 Nigeria spent $4.2bn (400% on 2000) on food imports:
– N635bn ($4bn) on wheat,
– N356bn ($2.3bn) on rice,
– N217 ($1.4bn) on sugar.
– commodities it should be exporting 11th in world arable land v 116th out of 138 farming nations
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Compare
Israel – desert – 14,000 farmers – 2 billion USD – 70% exported
Nigeria – 50 million farmers - $4.2 billion imports
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Issues
largely subsistence farming – little large scale farming farm sizes are between 0.5 - 3 hectares - national average 1.2
hectares small farms produce 80% of the total food Land tenure Seed and fertiliser - yields remain far below their potential
Lack of storage and processing facilities Use of rudimentary methods, tools and implements Problems of pest and diseases Negative attitude of people towards farming due to its low
reward Education etc etc
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Key Issues
Markets:
– Lack of markets locally
– No incentives for private sector
– No access to markets away from home
Supply chain:
– demand variability
– fluctuations in supply chain demand or inventory levels
– late delivery
– lack of reliable communication
– long lead times
‘The network of organisations that are
involved, through upstream and
downstream linkages, in the different
processes and activities that produce
value in the form of products and
services in the hands of the ultimate
consumer’
Christopher M, 1992, p.12 Logistics
and supply chain management:
strategies for reducing costs and
improving service London: Pitman
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Issues
Post-harvest losses in Nigeria average between 20% and 40% depending on the crop, about the highest in the world
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Agriculture needs…
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and …..
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and….
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and….
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and….
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Transport - Silver Bullet?
Goldman Sachs - sample of 12 African countries, total infrastructure demand over the next four decades will amount to $1 trillion.
Nigeria alone will need $360 billion. Transport infrastructure links:
– production
– consumption
– exporting centres from original supplier to end-user
– connects markets, services and technologies
– facilitates vital deployment of products to marginal rural areas Removes many of the constraints that hold back agricultural
production
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Transport and Agriculture projects
Similarities Suitable, predictable and stable regulatory system Off-taker with suitable covenant Ancillary infrastructure (e.g. Lagos Metro – feeder buses) Finance Government support, policy and vision Expertise/management Structure is critical – create the right incentives
Agriculture Food aggregators – provides service and improves
predictability Food prices – only going in one direction – up? Storage
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Food Corridor
Create a food corridor alongside the transport corridor to move food from the north to the south:
– Economically– Quickly– At predictable and reasonable costs– For consumption and export
But to create a food corridor you need to link production, consumption and exporting centres for which ….
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A transport corridor – World Bank
Seaport, rail, and inland transport capacities
Handling and storage facilities at interface and terminals
Adequate maintenance and maintenance budgets
Adequately structured user charges
Cost recovery from vehicles in transit
Unified transport regulations across countries (e.g. on axle-loads, dimensions,
insurance, documentation)
Efficiency of services
Development of containerization
Government monitoring and efficient regulation
Reform and privatization of parastatals
Unified regional policies on intermodal traffic, including rail-road transfers
Harmonization of customs provisions and trade standards
Standardization and simplification of documents
Compliance with trade agreements
Common regional sector policy
Orderly professional development for transport intermediaries
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Public-Private Partnerships (PPP)?
An arrangement between the public and private sectors with clear agreement on shared objectives for the delivery of public infrastructure and/or public services
An approach to increase private sector involvement in the delivery of public services
Main features of PPPs:
– Co-operative and contractual relationships
– Shared responsibilities
– Method of procurement
– Risk transfer
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Public-Private Partnerships (PPPs)
Can take a variety of forms
Rationale - achieve more through partnership than any of the parties could do on their own
Can attract the best companies and skills in the world – structure and framework/environment
Examples of PPP projects in Nigeria – Lekki toll road
– Blue Line metro
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PPP Pipeline
Apapa – Oshodi expressway Shagamu- Benin- Asaba highway Abuja-Kaduna-Kano highway Lagos-Iseyin-Kishi-kaiama Kaiama-Bahana-Bobe-Kaoje-Gwabe-Fokku
Sokoto River Katsina Ala Bridge at Buruku River Niger bridge at Nupeko River Benue Bridge at Ibi Enugu-Port Harcourt Dual Carriage way Onitsha-Enugu Dual Carriage way
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Public-Private Partnerships (PPPs) in agriculture in Africa
PPPs for agriculture can take a variety of forms and structures e.g:
– Multi-partner collaborations – micro insurance for small holders (Kilimo Salama)
– Irrigation PPPs (e.g Zambia – Chiansi Irrigation project – Infraco)
– Cotton made in Africa
PPPs generally under utilised in agriculture sector
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‘PPPs will do it for Nigeria’s
infrastructure and Economy’
Engnr Mansur Ahmed FNSE
Infrastructure Concession Regulatory Commission - 2011
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Biography
Raj KulasingamRaj specialises in infrastructure and utility projects including projects in the power, transport (road and
rail), water, waste and oil and gas sectors. He advises on concessions, the regulation of utility and
transport companies and PFI/PPP projects. He has worked in the UK, the Middle East and Africa,
acting for a mixture of developers, sponsors, lenders and governments.
He has been advising on PPP projects since the early 90s when the UK government initially started
its PFI/PPP programme and advised on many ground-breaking PPP projects such as the Highways
Agency’s road PPP programme (including the multi billion pound M25 project), the MOD’s water and
wastewater project (Project Aquatrine), the first water treatment project in the UK (Project Alpha in
Northern Ireland) and the first municipal PPP project in the Middle East (Ajman Wastewater).
A significant part of his practice has involved advising on projects in Sub-Saharan Africa. He is
currently advising on a police PPP project in Uganda, a hydro project in Zambia, a power project in
Nigeria and a restructuring transaction in Zimbabwe. He is also the lead international legal adviser to
Eko Rail on the Blue Line Lagos Metro Project.
LondonD +44 (0)20 7246 7596T +44 (0)20 7242 1212F +44 (0)20 7246 [email protected]
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