How NSIA-Managed Presidential Fertilizer Initiative Transformed Agric Sector

June 17, 2020
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It must be surprising to many that an initiative set up less than three years ago to transform the agricultural sector in the country is closing in on accomplishing almost all its mandates.

The Presidential Fertiliser Initiative (PFI) took off in 2017 after the visit of the King of Morocco to Nigeria in December 2016 and the subsequent signing of a three-year bilateral agreement with Morocco for the supply of Di-ammonium Phosphate (DAP), a key ingredient for fertiliser production.

Prior to the agreement, Nigeria’s fertiliser industry was in comatose, with only five blending plants operating below 10 percent of installed capacity. No one expected a miracle to happen on account of the agreement between Nigeria and Morocco due to the well-documented cases of corruption that had plagued the sector, and which had shortchanged Nigerian farmers for decades.

The mandate of PFI was to make high quality fertiliser available to Nigerian farmers at the right time and at an affordable price, and to revive the ailing fertiliser blending industry so that Nigeria could achieve food security.

Three years down the line, PFI has proven to be a legacy initiative that has changed the agricultural and agro-business industry in the country for good. It has achieved a substantial chunk of its mandate in a way that recommends it as a model for government intervention in critical sectors and a template for government-led import substitution.

How was this possible? Investigations show that the involvement of the Nigerian Sovereign Investment Authority (NSIA) as managers of the initiative seemed to have changed the dynamics for the President Muhammadu Buhari administration which hoped to diversify the economy away from oil into agriculture.

Having been invited to serve as programme operator and fund manager, the NSIA subjected the PFI to its own governance processes which ensured accountability and transparency at all stages of the procurement, production, and sale processes.

Documents sighted by LEADERSHIP indicate that the PFI is operated under a governance system that subjects its operations to regular audit by PricewaterhouseCoopers, a reputable audit firm. Disclosures on the programme are made on the project in NSIA’s audited financial statements which are published annually on its website following rigorous internal audits and periodic reviews by the Office of the Accountant General of the Federation.

The PFI’s business model, according to insiders, involves sourcing for and procurement of four constituent raw materials required for production of NPK 20:10:10 fertilizer. Of the raw materials sourced, 37% of the input are imported, consisting of DAP from Morocco and Muriate of Potash (MoP) from Russia while the remaining 63% of the raw materials, mostly Urea and limestone granules, are sourced locally. The raw materials are blended locally at accredited blending plants nationwide to produce the fertilizer for delivery at a target price of N5,500 per 50kg bag (now N5000 per bag from April 2020).

Financial statements on the NSIA website indicate that since the inception of the scheme in 2017 up to 2019, N107bn has been invested in PFI while another estimated N114 billion is billed to be invested in 2020 – on items that cover raw materials, logistics, contract blending costs by 3rd party blenders among others.

Insiders explained that the programme has revived operations in a total of 31 blending plants thereby increasing domestic production capacity by nearly 300% and improving the quality of fertilizer available to domestic farmers.

“This cannot be possible without strict control systems which ensure that we monitor the flow of materials and funds,” said a source at the PFI, adding that “the auditors have yet to report any case of fraud due to the controls that had been put in place”.

For instance, he said to mitigate against pilferage under the programme, there is a joint security task force which is superintend by the Office of the National Security Adviser (ONSA). The task force oversees the monitoring of movement, storage and general handling of raw materials and finished products alongside appointed Collateral Managers who ensure quality, consistency in weight and mix per bag of NPK 20:10:10 to avoid adulteration. In addition, he said, Collateral Managers routinely review and conduct assessments of each blending plant to ensure contractual standards are upheld.

“Also, to prevent adulteration, the Institute for Agricultural Research (IAR), Zaria was contracted to assist with periodic testing and quality assurance. IAR and more recently the International Institute of Tropical Agriculture (IITA), Ibadan conduct random tests on each batch of finished product delivered under PFI,” he stressed.

A manual seen by this website states that all 31 blending plants are subjected to the continuous audit process of the PFI to ensure compliance with approved standards while all incidents are thoroughly investigated by all the parties involved in monitoring the program – ONSA, collateral managers, FEPSAN, NSIA, and External Audit firms.

The website’s sources maintained that it is impossible to reduce baggage or increase delivery price of fertilizer due to the checks carried out at every stage of the process.

The price per bag at the gate of any PFI accredited distributor is monitored and has remained N5,500 per bag since inception until recently when it was reduced by President Muhammadu Buhari by N500 per bag, to N5,000 with effect from April 2020, as a COVID-19 palliative and shortfalls in cost is paid to the NSIA.

To obviate sharp practices from any quarters, a top official stated “Under PFI, sales collections are received through partner commercial banks of the blending plants with regularly sweeps into NSIA’s TSA accounts. Settlement of credit sales is similarly routed and terminates in a TSA account. The programme is structured such that it is impossible to make lodgments into accounts outside the designated accounts for each blending plant.”

The prudent management of the PFI has transformed the agriculture sector in obvious ways. For instance, NPK fertilizers which was sold at between N11,000 to N13,000 per 50kg bag in some places now sells for N5000, making it possible for farmers to access more of the product to improve yields.

In the past only farmers that were lucky get up to two bags of subsidized fertilizer. But farmers could today buy as many bags of fertilizer as they want at an affordable price.

Moreover, the initiative has created more jobs for Nigerians. According to FEPSAN estimates, over 100,000 new jobs have been created outside farming jobs. It has created jobs in other sectors of the economy such as logistics, haulage/transportation, ports management, bag manufacturing, industrial warehousing, and micro-economic activities in and around the blending plants.

Apart from boosting economic activities in the country, FEPSAN estimates that the PFI has saved Nigeria hundreds of millions in foreign exchange to date and billions of Naira in budgetary subsidy which no longer had to be paid.

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