Regional Commodity Exchange As Panacea To Rural Poverty and Low Agricultural Productivity

By Taminu Yakubu

Nigeria has 75 million hectares of land for farming.  Of these, only 44% or 33 million has been deployed into production with a yield hardly up to 20% of the average standard threshold. Nigeria has 1.2 million hectares for irrigation, with only 25% of it or 300,000 hectares under cultivation. The observed suboptimal output is certainly due to low productivity exacerbated by massive under investment.  And there is a historical setting to this conclusion, among other reasons.

The abrogation of states owned commodity boards in the wake of the Structural Adjustment Program (SAP) disconnected Nigeria’s agricultural  and rural sectors from international trade by destroying the quality assurance scheme that had made both to thrive.

Asiwaju Bola Ahmed Tinubu correctly believes that the final solution to the challenges in agriculture and the rural areas lies in reconnecting our agriculture to the global markets to overcome the crippling effects of the sectors’ under capitalization. Asiwaju Bola Ahmed Tinubu, again, correctly believes that there is no better way to attract the needed investment to these two interrelated sectors than through regional commodity exchanges.

The regional commodity exchanges would come with Institutions, Infrastructures and Instruments that would address the enduring challenges of low agricultural productivity, negate the lack of financial inclusion among 40 million farmers and rural dwellers,  stop the arbitrage which keeps our farmers in perpetual poverty, reverse the absence of a national food security program, open up the global markets  for our agricultural commodities,  turn around the lack of standardization and ultimately guarantee an endless flow of liquidity from the global financial markets for the proper capitalization and substantial improvement of yields in agriculture in Nigeria.

There are very compelling macroeconomic factors why the commodity exchanges should start as regional entities.  Asiwaju Bola Ahmed Tinubu, a strong advocate  for the political reorganization and economic restructuring of the country, believes that the federating units require solid economic institutions that would engender commercial competition and capital accumulation among them.

In parts of the country where agriculture and rural areas are the major components of the informal sector, the praxis of a warehousing receipt system will shrink the sector and make deposit money banks viable enough to extend financial inclusion to rural inhabitants including women farmers. A warehousing receipt system will also turn the huge farming population of 40 million people into tax payers.  Asiwaju Bola Ahmed Tinubu, subscribes to the profound world  view that, it is this transformation of farmers into tax payers that will make our  subnational governments finally financially viable.

• Yakubu, former Economic Adviser to the late President Umaru Musa Yar’Adua, presented this paper at the meeting between APC Presidential Candidate, Asiwaju Bola Tinubu and the Business Community in Lagos, on Tuesday, November 1, 2022.