Monday, July 18, 2016

States can be self-sufficient via non-oil export: Nasarawa as case study

One of the most blessed states in Nigeria is Nasarawa because it combines a unique potential for both agriculture and solid minerals. Its appellation as “Home of Solid Minerals” is, indeed, true because this is the most endowed state in Nigeria in terms of deposits of economically and commercially viable natural resources.
The report of the 2013 National Survey on Agricultural Exportable Commodities done through the collaboration of Central Bank of Nigeria, National Bureau of Statistics, Federal Ministry of Agriculture and Federal Ministry of Trade & Investments revealed that Nasarawa State has great potential for the production and exportation of sesame seeds, ginger and sugarcane.
According to the report of BudgIT on the revenue and expenditure of the Nigerian states from January to last July, Nasarawa was the fourth on the list of states that with huge deficit. Despite the huge potential of this state, it has not met its recurrent expenditure due to over-dependence on federal allocation.
This report is aimed at showing the government of Nasarawa State that it can truly diversify the economy of this state by making some deliberate effort to increase the farming of the sesame seeds, ginger and sugarcane in the state. The government should encourage citizens to undertake farming of exportable product by forming cooperatives in different parts of the state, train citizens in the farming of one of these commodities, provide them with improved variety of seedlings, agree a price to buy the harvested crop from them and then give them bank guarantee to buy the harvested crops from them at a collection point and pay them back within a stipulated period.
This means the state will partner with trading firms to coordinate the exportation of the commodity and earn  foreign exchange afterwards. The state can then pay the farmers from the export proceeds upon conversion to Naira. This model has a humongous potential not just to generate revenue for the government, but also to create unprecedented job opportunities for the citizen of this state.
In this article, I will be considering the potential of farming and exporting sesame seed as a very viable and sustainable means of revenue generation for Nasarawa. Let me also point out that the facts raised in this paper are based on the data obtained from different research done by Central Bank of Nigeria, National Bureau of Statistics, Ministry of Agriculture and some universities in Nigeria.
Nasarawa produced about 40,000 metric tonnes of Sesame seeds in 2012. Using the national average of about 38 per cent, this state has arable land that is about 1,041,292.80 hectares of lands. We have made some reasonable and very conservative assumptions in this analysis and these include:
  • The state is using just 20 per cent (260,323.20hectare) of this land for the farming of sesame seed -the yield per hectare of sesame is two metric tonnes per hectare (even though, there are varieties that can yield more than this) this yield was used to make provisions for losses that might occur during harvest -the unit price of sesame seed is $1,200 per metric tonnes FOB Lagos (even though it can be as high as $1,500.
  • Cost of farming was put at N122, 000 per hectare based on some research works-cost of exporting per metric tonne was put at N25, 000 based on the export projects I have handled in the past.
With a yield of 2MT per hectare, this means that the state can produce 520,646.40MT of sesame seeds on the land size stated in the assumptions above. If this sesame seed is exported at a free on board (FOB) price of $1,200/MT, the total proceeds will be $624,775,680.00. Using a conversion rate of N280 to $1, this amount to N174, 937,190,400. The unit cost of farming sesame seeds and exporting are N130, 000 per hectare and N35, 000 per MT respectively. The total cost of farming plus 30 per cent profit on the sales to the government (or to the trading company engaged by the government) comes to N43,994,620,800 and the total cost exporting (transport, documentation, freight forwarding etc) comes to N18,222,624,000. The total project cost (farming and exportation) will be about N62, 217,244,800. The estimated profit that can accrue to the state on this project comes to about N112, 719,945,600.
According to data obtained from government sources, the IGR of the state for the year 2014 was about N4, 085,127,585. From the analysis we have done on farming and exportation of sesame seed, the state could grow her internally generated revenue by about 2,759% from this source alone.
We strongly believe that if the government of Nasarawa can adopt this commodity as a means of revenue and implement the strategies suggested in this report, the state can be repositioned on the path to prosperity and greatness within few years.
For questions on this thought, you can reach me via email to

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