Nigeria’s Minister of Finance, Mrs. Kemi Adeosun says Federal Government has commenced discussions on the privatisation of the country’s railway system to provide necessary infrastructure for agriculture to thrive.
Under the real estate agreement signed, $500 million is expected to be invested in commercial and retail assets with an initial commitment of up to $100 million each from NSIA and Old Mutual, with deal origination and execution to be undertaken jointly by both parties.
The agricultural component of the deal will require both parties to make commitments for an initial vehicle size of $50 million ahead of the targeted $200 million, with deal origination and execution also expected to be undertaken jointly by NSIA and UFF Agri-Fund.
Mrs Adeosun said the agreement marked a critical milestone towards delivering on NSIA’s broader mandate to invest in key sectors of the Nigerian economy. She said the privatisation of the rail system would help address storage issues relating to farm produce, boost competition and ensure that farmers can move goods from the farm to where they can be sold efficiently.
She also said lack of infrastructure remained a key challenge to investments in agriculture.
The minister also said the federal government is currently examining the agricultural book with the Asset Management Company of Nigeria (AMCON) with a view to discounting some asset books in a bid to attract foreign investors.
According to her “One of the biggest problems with agriculture is infrastructure and it’s not that we don’t grow enough, it’s that very often, it (farm produce) rots in the fields because it’s so difficult to move it out or to store it.“So, there is a lot of investments that need to go in before you go directly into agriculture. As far as our diversification plans are concerned, agriculture is absolutely critical and we are focused on it both in the budget and other areas both directly and indirectly.
“But the most important thing is infrastructure because until you can move goods from the farm to where they are being sold efficiently, we would not be able to be competitive.
“Our fields are as good and fertile as anybody’s else’s one in the world but the problem is that it’s cheaper to move goods from China to Lagos than moving it from Kano to Lagos and that’s because we don’t have the infrastructure. We’ve got to get our rail moving and then, we can begin to scale up direct primary agriculture.”
Managing Director/Chief Executive, NSIA, Uche Orji said the deals would have multiple effects on agriculture and real estate as institutional investors from outside the country would be involved.
Deals with the proposed investors are expected to be closed and announced soon.
Orji said: “We believe that the real estate and agriculture sectors offer considerable potential for economic growth in Nigeria. Our commitment in these sectors is underpinned by the economic imperatives of urbanization, population growth and enhancement of liquidity for the sectors.
“The real estate vehicle once created alongside the Agriculture Vehicle will be configured to address some of these issues. The NSIA will continue to serve as a catalyst for private sector involvement in key sectors of the economy by exploring partnerships with credible entities such as Old Mutual Investment Group and UFF Agri-Fund.”
Chief Executive, OMIG, Diane Radley, said that the partnership with NSIA was critical step in its plans for commercial real estate and agriculture strategies in Africa
By Kede Aihie