Special Agro-Industrial Processing Zones and Agricultural Transformation Centres (SAPZ/ATC), have the potential to transform Nigeria’s rural communities to economic power hubs according to Professor Banji Oyelaran-Oyeyinka, Senior Special Adviser to the President of African Development Bank on industrialisation.
Speaking at the groundbreaking ceremony of the Eruwa Agrobusiness hub in Oyo State at the weekend, Professor Oyelaran-Oyeyinka said that the establishment of Special Agro-Industrial Processing Zones was a template for lifting the rural poor from poverty to becoming a market with significant spending power.
SAPZ is a cluster model that concentrates companies engaged in agro-processing activities within areas of high agricultural potential. The model builds enablers such as infrastructure, transportation, power, irrigation and others to boost productivity and integrate production, processing and marketing of priority commodities.
The AfDB and its partners are providing catalytic financing and technical support for the development of an initial seven Special Agro-industrial Processing Zones in seven states and the FCT.
Citing example with the population of Eruwa, which is estimated to be over 120,220, he said the average rural dweller earns $2 dollars per day, “suppose we change the lives of all Eruwa smallholders raising their earning to $10 per day. The extra $8 per day will constitute a significant consumer spending power of 120,200 multiplied by $8 using a multiplier factor of 1.5 translates to $526 million (N8.4 billion) annual income in Eruwa alone.”
He said Oyo State has an estimated 1.2 million smallholder farmers. “Suppose this number of farmers alone without considering the massive number of urban poor are transformed from poverty level of $2 per day to $10 per day.
“This adds an additional $52.6 million (N84 billion) using a multiplier of 1.5 to consumer spending! This equals to adding the same to the GDP of the state. This will immediately trigger the setting up of new business, small, medium and large.
“It will lead to mass job creation and significant rise in the GDP per capita. That was how China became no two economy in the world by lifting up 800 million from poverty converting them to mass consumers!”
He called on state governments across the country to establish community banks within the SAPZs.
He recalled that community banks were initially established to mitigate the harsh impact of the Structural Adjustment Programme (SAP) introduced in the 1980s.
“The idea dates to Chief Awolowo’s ‘Opticom Strategy’ and was led by late Prof. Akin L. Mabogunje under the Directorate of Food, Roads, & Rural Infrastructure (DFRRI) in the 1980s,” he said.
“Over the period, the National Board for Community Banks established over 1,300 community banks all over the country.”
He urged states to re-establish this institution within the SAPZ framework given the failure of collateralized lending of commercial banking.
According to him, “Credit enhancement will be a pivotal component of the SAPZ/Agricultural Transformation Centers (ATCs) in addition to mobilization and deliberate organization of rural farmers.”
Professor Oyelaran-Oyeyinka praised the Oyo State government for being one of the states that are pioneering the establishment of SAPZs in the country.
“Oyo State is one of the forerunners of SAPZ with its proactive development of the Fashola industrial park and now with Eruwa Agricultural Transformation Centre (ATC) being turned into a major production hub,” he said.
“The design of the ATC is purposely done to be centrally located within farming clusters. The ATCs provide services to farmers including, technology, inputs, finance, production and, postharvest support and uptake markets through the arrangement of efficient, quality feedstock supply for the Processing Hub including, aggregation, storage and pre-processing.”
He explained that the organizing principle of the SAPZ is “government enabled-private sector driven”.
“The catalytic financing enables investment in public goods, fosters policy interventions and the provision of desirable support services and skills development that make it easy for private sector actors to partner to design, build and operate the zones,” he said.
He noted that Oyo State is already qualified for funds disbursement and will soon sign up with its preferred Design, Build and Operate (DBO) contractor.
He said the choice of a DBO must be strategic as “we do not anymore want White Elephant projects in Nigeria.”
He said the DBO of the SAPZ will be expected to bring its own equity capital, build the zone, operate and manage the zone for the benefits of the people. “Additionally, the DBO must have the global clout and leverage to attract a wide range of regional and global private sector investors into Ijaiye, Eruwa and Fashola. We believe from these sites, Oyo State will earn billions of dollars from exports, help reduce food imports, end insecurity, stem rural-urban migration, assure food security and nutrition for all, and transform rural farming communities into arenas of industrial prosperity. “Where we used to export cocoa bean, we would sell locally and export cocoa liquor, cocoa cake, cocoa butter, cocoa powder and chocolate. Where we export cassava pellet, we will sell locally and export industrial starch, sorbitol, ethanol, fructose and High-quality cassava flour (HQCF). “Our expectation is to do a groundbreaking at the Ijaiye SAPZ Hub before the end of Q1 2025 and see active construction in real time.”