The Nigerian Sovereign Investment Authority (NSIA)’s intervention in the Presidential Fertilizer Initiative has boosted domestic production capacity of the commodity by nearly 300 per cent and improved its quality.
NSIA as managers of the initiative appeared to have changed the dynamics for the President Muhammadu Buhari administration’s diversification of the economy from oil to agriculture.
A scorecard of NSIA shows that since it took up the role of programme operators and fund managers, the organization had been able to subject the PFI to its governance processes which had ensured accountability and transparency at all stages of the procurement, production, and sale processes of the commodity.
Persecondnews recalls that the Presidential Fertilizer Initiative took off in 2017 and within three years it has been able to transform the agricultural sector in the country and accomplishing almost all its mandates.
The PFI, after the visit of the King of Morocco to Nigeria in December 2016, signed a three-year bilateral agreement with Morocco for the supply of Di-ammonium Phosphate (DAP), a key ingredient for fertilizer production.
Prior to the agreement, the Nigeria’s fertilizer industry was in comatose, with only five blending plants operating below ten percent of installed capacity.
With the well-documented cases of corruption that had plagued the sector and which had shortchanged Nigerian farmers for decades, Nigerian farmers were probably pessimistic of the agreement between Nigeria and Morocco.
The mandate of PFI was to make high quality fertilizer available to Nigerian farmers at the right time and at an affordable price, and to revive the ailing fertilizer blending industry so that Nigeria could achieve food security.
Persecondnews reports that three years down the line, NSIA and PFI have proven to be a legacy initiatives of government that has changed the face of agricultural and agro-business industry in the country.
Till date, PFI is operating under a governance system of NSIA subjecting its operations to regular audit by PricewaterhouseCoopers, a reputable audit firm, it was further learnt.
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.
Per Second News also gathered that the raw materials are blended locally at accredited blending plants across the country to produce the fertilizer for delivery at a target price of N5,500 per 50kg bag (now N5000 per bag from April 2020 following Buhari’s intervention).
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.
Sources said 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. The auditors have yet to report any case of fraud due to the controls that had been put in place,” a PFI source said.
According to the source, 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.
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.
According to a manual on its website, all the 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 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 said: “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.”
Farmers told PSN that in the past a farmer could only two bags of subsidized fertilizer but that today a farmer could buy many bags at affordable price.
On job creation, the initiative has created more jobs for Nigerians with an estimated 100,000 new jobs have been created outside farming jobs while it has also 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, it was also learnt.