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Another “Operation Fool The People” of Kwara

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A N70 billion agricultural project packaged after the controversial Zimbabwe farmers initiative of the Saraki administration which became a drain on public funds is in the making again in Kwara State

It is the single biggest investment the governor has attracted to the state since he assumed office on May 29, 2011. On January 26, 2012, Abdulfatah Ahmed, governor of Kwara State, was all smiles as he signed a N70 billion deal for large scale production of rice in the northern part of the state. The project involves the cultivation, processing and packaging of rice in Pategi, Edu local government area of the state.

The tripartite agreement involves the Kwara State Government, KWSG, Valsolar, a Spanish firm, and Guaranty Trust Bank PLC, GT Bank. While Valsolar provides 70 million Euros annually over a period of four years, the Kwara State government will provide 500,000 hectares of arable land along the River Niger. GTBank will provide the needed lifeline requirements on the side of the government in the joint venture with the foreign company.

At the document signing ceremony, the governor explained that the deal was meant to consolidate the efforts of the government in agricultural production through Private Public Partnership, PPP, as demonstrated by the immediate past administration of Bukola Saraki through the Shonga commercial farm initiative. “The MoU was based on the need to consolidate on the immediate past administration’s platform towards forging ahead at ensuring that food security is guaranteed for all the populace through agriculture initiative.” The state government, he said, would provide 30 percent of the total package of the cost of the project while the Spanish investors would provide the balance. The state’s share, he calculated, is seven million Euros. 

Segun Agbaje, managing director of GTBank who was at the MoU signing ceremony, applauded the project. He said the development of agriculture would greatly transform Nigeria’s economy. “Agriculture probably is the only way forward for a country like Nigeria. It is a big step for employment. It is a big step for food production and import substitution,” he said, adding “we will do all we can to assist the state in performance of this great initiative.”

While the governor and his acolytes were still savouring the accolades that attended the state’s efforts at boosting rice production in the country, Akinwumi Adesina, minister of agriculture, breezed into the state to sign another MoU on behalf of the Federal Government. According to the minister, the MoU was designed to encourage cassava cultivation on a commercial scale in the state. The agreement, he said, “will facilitate market outlet for 660,000 tonnes of cassava in the short-term, upgrade five small and medium scale enterprises producing high quality cassava flour, conduct infrastructure and equipment upgrade for eight clusters of food processors, establish 14 large dried chip processing plants each capable of producing 6,000 tons of dried chips, create out grower farmers and establish demonstration trials in 50 locations in the state, among others.”

The collaboration according to him was borne out of the success story of the Shonga Commercial Farming initiative of the state government and Molete Youth Integrated Training Farm. And the minister added a sweetener: “Your Excellency, Kwara State is very important to Nigeria. This state is rapidly transforming as the sustainable food basket of Nigeria.”

But not all the people of the state are in support of the new agricultural project of the state government. In fact Ahmed has come under severe criticism by the opposition politicians for his N70billion rice deal with the Spanish firm. The Action Congress of Nigeria, ACN, punctured the veracity of the MoU, claiming that the project is a monumental fraud. It particularly alleged that the purported consortium involved in the project is not registered in Spain. In a statement, Kayode Olawepo, the party’s state chairman, alleged that the project was shrouded in mystery and fraud and that it was an attempt to commit public fund and property to yet another questionable project. “We deem the whole arrangement a monumental fraud. Our research reveals that no company exists under the name Valsolar Consortium whether in Spain or anywhere in the world! Assuming without conceding that such a company exists in Spain, how come it is not listed or registered with the Spanish’s equivalent of our own Corporate Affairs Commission? Does that not raise the question of credibility which is sine qua non in any business deal,” he asked.

Olawepo wondered why KWSG must commit taxpayers’ fund to the same venture it is certain to convert to a private venture. “If, as it is clear from the above, that Valsolar Consortium is a non-existent company, why give out 20,000 hectares of fertile land belonging to our people to it? This fraud must not stand. We urge the people of Kwara State to resist by all means legal this fraudulent arrangement under the guise of commercial farming. Enough is enough,” he said.

The state government has, however denied all the claims, arguing that the process of selecting the consortium and other ancillary activities went through approved regulatory procedures both in Nigeria and Spain. Defending the government, Muyideen Akorede, senior special assistant to the state governor, in a statement titled: “How we clinched N70b Rice deal,” said contrary to the opposition party’s claims, there was no shred of fraud in the entire project. He said the Kwara State government received a letter of expression of interest from the Spanish investors in October 2011, seeking to partner with the state government to set up rice cultivation, processing and packaging project in the state following a recommendation by the Spanish Embassy in Nigeria.

According to him, the company is undertaking similar ventures in other parts of Africa under Project Africa Rice and that in line with the state government’s policy of encouraging foreign direct investment; officials were subsequently dispatched to Spain to open discussions with the company. “The delegation was also directed to conduct vigorous checks on Valsolar’s legal status as well as assess its capacity to invest the needed funds in the project. These checks included original copies of Valsolar’s certificate of incorporation, the articles and memorandum of association which were sighted and duly notarised copies obtained for the state government’s record. Government also has duly notarised and authorised English translations of these documents which indicate that Valsolar was registered on July 7, 2006 with registration No. B06479802 in Extre Madura Region of Spain.

Also, the state government has a duly authenticated resolution by Valsolar’s board, authorising the company to invest in Kwara State. At the same time, Valsolar conducted a satellite survey of the state’s topography to determine the suitability of the soil. Thereafter, the company conducted due diligence which included the state’s Fitch Rating after which it consented to signing the MoU. Akorede said that Valsolar-Kwara Company Limited, the proposed joint venture company, has been approved and reserved by the Corporate Affairs Commission, CAC, based on the presentation of all relevant documents concerning Valsolar Consultoria 2006 SL.

He also said KWSG’s seven million Euro investment which is 10 percent of Valsolar’s annual investment, has been held in an escrow account to show its commitment to the project. This can either be withdrawn or reinvested in the project at the end of the four year investment period. “All the documents have been authenticated by the Embassy of Spain in Nigeria where they are available for verification,” he said.

Akorede emphasised that the Rice Project would generate 12,000 jobs, stimulate economic development in the state and ensure the development of agriculture in the state through transfer of technology and training of farmers. He said the scale of the project and the value of Valsolar’s investment was an indication of its confidence in Kwara State’s growing reputation as a prime investment destination.

In a way, for many ordinary Kwarans, there appears to be a return to the state’s unenviable past, a return to the past typified by the skepticism and even outrage that had greeted the ruling party’s commercial agriculture initiative known then as the Zimbabwean Farmers Programme. The farmers and their business as time went by were rechristened New Nigerian Farmers Initiatives. High on hope, the precursor Saraki administration had regaled the people with the lofty benefits that this initiative would usher into the state’s rustic communities. But of all the policy initiatives of the Saraki administration, none drew an admixture of suspicion and outrage as the Zimbabwean Farmers Programme.

Newswatch gathered that shortly on arrival, the 13 farmers formed a company registered with the CAC as Kwazimbo Enterprises Limited. The 13 farmers, who are also the company’s directors, had at incorporation Alan Jack as chairman and Piet Du Toit as vice chairman. Although the state government provided business home for the displaced farmers, the relationship between the administration and the white farmers was unclear. Critics tagged the project a scam, considering the veiled arrangements. Most vociferous of the critics was Iyiola Oyedepo, a lawyer and an ACN chieftain, who wrote a scathing expose on the Zimbabwean farmers in his book titled: Time Bomb: The Story of Kwara-Zimbabwean Farmers.

While government was at pains to explain that the initiative was part of its large framework for public-private partnership, it had embarked on massive acquisition of thousands of hectares of land at Shonga, Edu local government. It sank more than two billion Naira into the business procuring machinery and equipment, paying compensation to thousands of local farmers who lost farmlands as well as in boosting basic infrastructure in the largely rustic Shonga countryside.

Beside all these, a consortium of five banks - Intercontinental Bank, GTBank, FinBank PLC. Platinum Habib Bank PLC and Unity Bank PLC - provided facilities for Shonga farm project. Although the banks have all entered into debt and equity financing options, what is not certain is how much of these indebtedness is shouldered by the state, while it keeps speaking from both sides of the mouth, telling Kwarans one moment it is a public-private partnership and another minute that it is a wholly private enterprise.

About six years after the 13 farmers relocated to Shonga, critics of the administration have insisted that there has been no socio-economic impact of the investment in this initiative. Oyedepo, while assessing the Shonga farm project said: “They have been here for six years. Even if they are planting maize, we ought to have seen the effect in Ipata Market by now. If they are planting rice, we should be seeing the effect by now. Recently, they brought cows and said they are now producing milk and other dairy products. But these cows are not reared here; they were brought from some place in South Africa. Is this too different from somebody exporting a finished product? They brought their cows here, milk them and start packaging. What is our own contribution? Where is the scientific breakthrough in that?”

But the scarier is the revelation which emerged from the Nigeria Agricultural Co-operative and Rural Development Bank Limited, NACRDB, detailing the state’s dire financial condition as guarantor of a N650 million facility obtained by the farmers. Investigation showed that on February 15, 2006, the farmers, operating under Kwazimbo Enterprises Limited, got N650 million to part-finance the cultivation of 4,000 hectares of maize at Shonga. The loan period was for three years with 14.5 percent interest rate subject to variation among other administrative costs. The bank requested for and got a “guarantee of Kwara State government backed by Irrevocable Standing Payment Order,” ISPO, from the Federal Ministry of Finance, authorising deductions from the state government’s statutory allocation in the event of default. The money was then released to Kwazimbo Enterprises Limited which strangely put its address merely as Kwara Farm 5, Shonga, Kwara State.

But it was not long before trouble started - both for the farmers and the state government which guaranteed the loan. In a letter which Kwazimbo fired to Abba Sayyad Ruma, the then minister of agriculture, the farmers sought his assistance in rescheduling the loan. Among the panoply of excuses it gave for lagging behind in its payment schedules was that funding through the banks had taken longer than expected, a situation that delayed the individual projects of each farmer. The farmers also cited “increase in costs of the project, especially, importation cost, diesel and building materials and delays in importing equipment while marketing of the produce had taken longer than expected.” Kwazimbo then asked for another moratorium of 18 months in addition to the rescheduling of the loan.

For a project which the state government had gleefully presented as the flagship of its public-private partnership, the farmers then made a strange plea to the minister: “We, the farmers, would not like the state to have to pay these debts through its ISPO, as the project is wholly owned private partnership. Yet, we have the full backing of Kwara State in our endeavours,” they wrote.

The farmers’ request was promptly forwarded to the NACRDB for perusal and advice. The report of the bank was a sublime indictment of the farming families under the aegis of the Kwazimbo Enterprises. The bank’s report, dated December 16, 2008 and addressed to the Minister of Agriculture, identified the Kwara State government as the motivating force that facilitated the coming of the Zimbabwean farmers into the country. It noted that Kwazimbo could not secure a facility from the bank due to inability to get an acceptable security. The farmers’ case was further worsened by the fact that they had earlier taken a N720 million facility from Intercontinental Bank PLC which was secured with the machinery, equipment and other equipment on the farm lands.

The report of the bank on the loan performance was a scathing .indictment of the farmers who it accused of violating terms of the loan agreement when it diverted the loan from maize production to silage production. “The company was supposed to repay the bank from the proceeds of the sale of maize which it now converted into silage to feed its dairy cattle. The existing policy of loan diversion without the bank’s consent should ordinarily attract a sanction of loan call-in,” it stated.

The bank said that at the end of October 2008, N628,439,426.43 was due for repayment. Apparently uncomfortable with its guarantor position, the state government quickly paid N122 million leaving a balance of N506,429.426.43, in default. “The implication of this massive default is that the company (Kwazimbo) had failed to live up to its obligations to the bank. We have written several demand notes and appeal letters to the company and the state as guarantor of the loan (see attached), but to no avail,” the bank said.

Against the background of the dismal performance of the New Nigerian farmers in managing their loan portfolio, it was no surprise that NACRDB was to reach a damning verdict for the poor people of Kwara State: “In granting the loan, the promise of Kwara State government to back the loan with Irrevocable Standing Payment Order (ISPO) was considered as a key factor. We request, in line with the loan agreement to invoke the ISPO in the event of default, the state government should make good its promise and direct immediate deduction from its monthly allocation. The loan was for maize production and the proposed repayment was two instalments. Only a paltry sum of N122 million had been paid so far. In view of poor repayment and the huge amount in default, the bank cannot afford to entertain any further rescheduling. We, therefore recommend invocation of the Irrevocable Standing Payment Order for deduction of the debt from Kwara State government statutory allocation,” the bank said.

Apparently shaken by the turn of events, the Saraki administration was said to have made spirited efforts to stave off the balkanisation of its statutory allocation but to no avail. In February, last year, the state government was compelled to part with N614 million to pay the principal component as well as part of accrued interest of the debt owed by the Zimbabwean farmers, having been granted waiver on the N91million interest. What all these suggest is that the project eventually became a drain on public funds

This was the vague picture Kwarans have of Shonga Farm, at least until the emergence of the present administration. But it may well have been the reason for the opposition’s vicious attack on Ahmed’s food programme. Ever suspicious of the ruling PDP government in the state, Sa’ad Omoiya, a lecturer at the University of Ilorin and the director general of Dele Belgore Campaign Organisation, Ahmed’s main rival in the 2011 gubernatorial election, said of the rice deal: “We know the way it is. Strong on its catch phrase of continuity, it may well appear that the emergent Ahmed’s administration, building on Saraki government’s proclivity for phantom projects, is more than determined to plod a familiar path.”

But Bayo Sangobiyi, manager, Agric and Marketing of Shonga Holdings Limited, said that critics of the state’s agriculture programmes are missing the point not only on Shonga Farms issues but on the general agricultural programmes and policies of the government. “It is either they are misinformed or totally uninformed about the programmes,” he said. “When people say they don’t see our products in Kwara, it is not as if it is not in Kwara, but our approach to marketing is a concept that people are not familiar with. What we have is the off-taker approach which is not yet common here. The off-taker can take from Ilorin here, and if he likes, he can take them to the US, England or anywhere, I don’t care, for as long as he does not owe me. But for our people to feel the impact, because they are the host, what we do for them is that we have created depots here and there, especially within Ilorin metropolis so that our people can walk in and buy. Even at the farm gate level, a lot of people come from as far as Offa, Ajase and every other place. People come to the farm to buy our products. We have fresh milk, yoghurt, chicken. I can’t count the number of women that have cold rooms in town selling our products. And they are labelled. There is no argument about this.”

Sangobiyi said that the rice project is an out-grower scheme. “You will plant, depending on the number of acreages on your field. I will plant mine too. What the funding partner will do is that they will encourage us with improved seeds, fertilisers, chemicals and whatever, which they will eventually deduct from the value of what they are buying off us,” he said, adding, “all these things were tried in the Awolowo’s Western Region days when the farm settlement projects started. That was how they were buying cocoa and all farm produce then.”

.  The criticism notwithstanding, the state government is forging ahead with its agricultural development plan. It has keyed into the Federal Government’s Agricultural Transformation Action Plan, ATAP, with a master plan that will be unveiled soon. Akorede said the state is partnering with Cornell University, New York, in this regard. The master plan, according to him, outlines strategies to improve the state’s agricultural and agro-industry infrastructure and harness the state’s agricultural endowment through the application of science and technology to the agricultural processes. It also aims to raise the state’s agricultural output to enhance economic, food and nutritional security of the people of Kwara State and of Nigeria as well as build on the previous administration’s successes in agriculture.

On February 6, 2012, Terrence McCulley, American ambassador to Nigeria, toured Shonga Farm. He commended the successes the white farmers had achieved in areas of production and processing of poultry, dairy among others. He also described it as a model, and hoped the US government would come into the project with the supply of equipment. He said that Shonga farm was a practical example of how state governments could support mechanised agriculture in partnership with the private sector.


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