MOFI sues for investment mobilization to drive industrialization of agriculture, other sectors

By Onwe Wisdom

The Ministry of Finance Incorporated (MOFI) has sued for investment mobilization to drive industrialization of the agricultural sector, says some key DFI and portfolio like Bank of Industry,  Development Bank and NEXIM Bank which are critical in driving industrialization of agriculture sector as well as experts have common challenge of under capitalization. Hence, the need to mobilize investments.

Ministry of Finance Incorporated make the sue through their Managing Director, Armstrong Takang while addressing the senate committee on finance today Monday at National Assembly.

He notes that a lot are things are been  works on but concerned Bank of agriculture as a key component is under capitalized for several years, and as such has not been able to support the agriculture sector the way it should, especially the retail end of it.

Evidence in the lack of support for farmers is the low production resulting from  the fact that a lot of farmers are not getting the support that they need financial as well as technical support.

“So we’re restructuring and recapitalizing bank of agriculture so that we can support at the very minimum”

On the power sector, MD, MOFI, Dr. Armstrong Takang says is another critical sector they working on, notes that  government owns (federal and  state) owned 40% of the distribution companies. But for the last 10 years since privatization, there really hasn’t been much contribution in terms of the power delivery to Nigerians. Neither has there been any value being created in terms of dividends being paid to shareholders, which is federal government and state government says MOFI  we’re working with ministry of power to explore ways to change that. Concerned on liquidation and the need to drive more investments.

Emphacizing issue around inefficiencies in connection due to lack of metering in that program. “we’re looking at the metering program as well as specific programs ongoing in that sector.

“secondly, within the power sector is issue around the transmission. We’re also working with Ministry of power as well as other stakeholders to create an inventory of our power assets in the generation sector, generation part of the value chain and to see how we can use those ones to raise investments rather than having to rely on our profession to expand that infrastructure.

” They’re all under capitalized and so there’s a need to mobilize investments both from government as well as external parties to make sure that they’re better capitalized to deliver on their mandate.

Briefing the committee on the need for  independent power plants, he says “The other thing I also want to talk about is  the need for us to begin to build independent power plants that are solar based, so that we don’t have to depend solely on the transmission line to generate and deliver energy to the points of needs.

“We have the pilot project  in Kano at the moment,  a 12 megawatt solar plant  within an industrial zone. Our view is that if we can replicate that model around the country, we can provide power to industrial zones to ensure that those businesses can have energy without having to depend on the transmission network.

“We think that, that’s a major patch, and we’re using it as a pilot to prove that, and we actually intend to expand the capacity of the one in Kano as well.We’re working with the State governments in that regard.

Applauding President Bola Tinubu renewed hope presidential initiative, he cited  the presidential initiative on CNG which is one of the alternatives to deal with the high PMS cost. And we made significant progress in really elevating the conversation and also driving the demand size and to mobilize investments across the value chain not only from the upstream, midstream, as well as downstream sectors.

Mr. President also launched the credit cooperation of Nigeria credit card, and that is a recognition of the fact that we need to elevate the level of consumer credit that is available to Nigerians. And so credit Corporation of Nigeria was birthed with three main areas one is to mobilize financing, do wholesale lending to financial institutions, who would not lend consumer loans to Nigerians. We think that that is not just providing consumer loans to Nigerians but also in terms of driving demand for many Nigerian products whether it is cars, furniture, and electronics, and even food as well as other items by Nigerians.

“Nigerians with this initiative don’t need to pay full amount for goods that they need because it’s not always practical. So we believe that the consumer credit will allow us to live a better lifestyle, afford more things without having to pay upfront for it and you can pay overtime based on the income they have. We’re very excited about this particular opportunity in terms of credit cards, the other aspect of credit card is credit guarantees which can give guarantees to financial institutions who will now feel comfortable to lend to Nigerians who ordinarily would not be able to qualify

Says another presidential initiative he want to bring to fore is  the  entity that was established to aggregate fertilizer and provide the components to blenders around the country.That way you take advantage of economies of scale, and also allow these blenders who are not able to import the components to have those components here and  blend locally, this will add value and then able to distribute this as close to the farmers as we can.

“The good news is that that has been very impactful in terms of being able to bring down the cost of the importation and in the distribution to different parts, notes that the only challenge at the moment is to reduce the cost of the fertilizer to the farmers. They were benefiting from low cost interest loans, which there’s been a challenge accessing  but in terms of the impact, the impact is increasing, and we intend to continue along that trajectory.

“We have  move from about less than seven fertilizer blending companies to over 50 of them nationwide at the moment. So we think that has made significant impact in terms of creating new businesses in that value chain and we think it also helps in the challenge that we’re facing within the average value chain.

MD Katang also brief the committee on  portfolio companies in terms of enhancing the level of corporate governance.

“Many of these companies have really suffered from lack of corporate governance, and we’re introducing that not only for existing portfolio companies but subsequently going forward for every new portfolio companies. We have a set of policies and guidelines that will guide the level of governance that they need to put in place when they actually commenced that, the idea is that there is a direct correlation between the level of corporate governance and an institution and the impact and the value that is created for that. We’ve seen that there’s evidence of it for the entities that have better corporate governance, the value they create, and the impact they make has been significant. And we have evidence and data to prove that we need to do the same thing for dividends as well.

And finally chairman and other members, I know you’re in a rush, but let me speak very quickly around  Ajaokota  steel company, which we all know and mambilla.

In terms of Ajaokuta steel, as you know, it is an entity that for over 20+ years was considered to be 80% completed, but there are key components of it. And we’re looking at taking those components and treating them as special business units. One of them is a light steel mill. If we think about what we’re going to be doing in the rural construction industry, as well as the housing project that we’re currently working on, we’re anticipating that about 7 million tonnes of steel will be required.

“We can’t afford to continue to import that and most of the important steel are substandard which is why you see a lot of houses collapsing.

“We think that if we begin to build and produce our own steel locally, no matter how small, not only are we going to reduce how much we’re importing, but we can also assure the level of quality of the steel that goes into our market. And we think that  will also prove that this is possible. And we can do more. We’re working with the Minister of State development, as well as the Minister of Finance to see how we can mobilize some initial investments to put into that as a pilot to test the lights steel mill and to get it back working again.

“We have a team that has already been there and significant work has been done. There’s been some work that you have also done in terms of assessing the feasibility of that and what it will take for us to fix that activities in adequate

“In the case of mambilla Distinguished Chairman, as you know, this is a project that held a lot of hope for Nigerians especially in terms of the generation of power from our natural resources that we have. Unfortunately, it’s been a lot of challenges with respect to the takeoff of that project. It is also one of the projects that we’re looking at to diagnose and find out precisely, what is it that we can do, despite all of those challenges that it has experienced as well as looking at it as an asset that has not performed as optimally as it should, but Chairman, we need to begin to change our strategy. Sometimes some of these projects are just too huge. And the capacity to execute some of those projects may not be available.

“We’ve seen a lot of those. And we think that we need to change strategy in terms of can we think big, start small and test it and make sure that we have a grasp of it before we actually expand our scope. Mandala is one of those projects that we’re looking at as well, to use our strategy to be able to move  forward.

The MD, MOFI, Dr. Armstrong Takang expressing concern on the country’s mortgage system says “one of the areas of challenge that we have for Nigerians is access to affordable and long term mortgages.

Nigeria’s can’t afford to buy a home using commercial interest rate from banks. It’s just not possible doesn’t happen anywhere in the world neither can it happen in Nigeria. So we’re working on a product which is affordable and long term mortgage program. He said.

Earlier, the Senate Committee Chairman on finance,Dst. Sen. Sani Musa says it is part of the constitutional responsibility f agency(s) and management team to appear before parliamentary committees when invited.

Sen. Sani Sues for repeal of the Act establishing the incorporation which he argued will brings the incorporation in tandem with present realities.