Federal Republic of Nigeria Federal Ministry of Agriculture and Rural Development Staple Crop Processing Zones Support Project (scpz)
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General Perceptions about the projectGenerally, with regard to perceptions about the project, there was a general acceptance and buy-in to the project across the locations and groups visited. The farmers, youths, women and Fulani herdsmen were appreciative of being consulted and expressed optimism that the project will positively impact their livelihoods. In Alape, Kabba-Bunu and Oshokosho, Lokoja the traditional council were satisfied with the process of consultations and stated that they have never seen it in that extensive manner before, and were convinced that the proponent will fulfil its covenant of compensating for their lost assets. Other areas such as Adavi, Okehi and Ijumu knew little about the project before now but were happy to embrace the project which they said will make a difference. There was a general acceptance and buy-in to the project across the locations and groups visited. The farmers, youths, women and Fulani herdsmen were appreciative of being consulted and expressed optimism that the project will positively impact their livelihoods. In Alape, Kabba-Bunu and Oshokosho, Lokoja the traditional council were satisfied with the process of consultations and stated that they have never seen it in that extensive manner before, and were convinced that the proponent will fulfil its covenant of compensating for their lost assets. Other areas such as Adavi, Okehi and Ijumu knew little about the project before now but were happy to embrace the project which they said will make a difference in the socio-economic landscape of their people. This consultation which has started during project implementation will continue during implementation. To this end, the proponent is required to provide relevant materials in a timely manner prior to consultation and in a form and language that are understandable and accessible to the groups being consulted. Disclosure The ESMF has been prepared in consultation with the Federal level PMU, State MDAs, CBOs/NGOs and some community groups. The ESMF will be disclosed publicly as a separate and standalone document for review and comment through the Federal/State Ministries of Environment at designated locations at Federal, Kogi State and LGAs, and in World Bank Info-Shop. Individual ESIAs/ESMPs will be prepared for each sub-project based on the guidelines and procedures highlighted in this ESMF and will be disclosed in like manner. ,CHAPTER ONE PROJECT DESCRIPTION1.1 Project BackgroundAgriculture has been acknowledged to possess the greatest potential for sustainable economic development especially in terms of its resource-based approach to growth. This notwithstanding, Nigeria’s comparative advantage in many agricultural products is being hampered by poor access to reasonably priced infrastructure and low cost financing along with problems in securing regular feedstock supplies. Also, the issue of instability in the policy and regulatory environment, which has been cited over the years to be the most common challenge to investment in building processing facilities across Nigeria, has been a factor militating against Nigeria's agricultural potential. Nigeria’s food import bill of over two trillion naira annually is not only exceptionally high vis-à-vis its national income, but also has an unsustainable annual growth rate of 11%. Thus, in addition to Nigeria’s high rates of population growth, the rapid rate of urbanization and changing tastes as well as an ageing farming population would seem to dictate an even greater potential danger of its dependence on basic food imports. Such a high import dependency hurts Nigerian farmers, displacing local production and domestic unemployment (which grew from 4.3% in 1970 to 6.4% in 1980 and to 24% in 2011) while contributing to employment elsewhere. The high food import dependency also fuels domestic inflation and exposes the country, with high susceptibility, to shocks in global markets. This trend of dependency on food imports, with its attendant great danger for national food security, in a world where even the exporting countries are mindful about food adequacy, would therefore appear to be unacceptable and unsustainable fiscally, economically or politically. It is consequent upon this that the Government of Nigeria has come up with several initiatives, amongst which is the Agricultural Transformation Agenda (ATA), to redress the situation. The ATA is addressing the constraints inherent in the Nigerian Agricultural Sector with a view to unlocking its widely acknowledged potentials. Through a paradigm shift from government-controlled to private-sector led agriculture, ATA has deregulated the seed, fertilizer and mechanization sectors; improving farmers’ access to modern farm inputs. In pursuing this agenda, the Federal Ministry for Agriculture and Rural Development (FMARD) in collaboration with the Government of Kogi State have earmarked 250ha for the establishment of the Staple Crop Processing Zone (SCPZ) and 280,000ha of land surrounding the SCPZ as Agribusiness Investment Region (ABIR) in which professionally managed farms produce the raw materials for the factories to be established in the SCPZ.. The general concept of the ABIR and the SCPZ Programs in particular adds to the vision of ATA by seeking to channel investments into infrastructure, and strengthening the policy and investment climate, in an ‘Economic Zone’ type of operating environment, for unlocking economies of scale and improving competitiveness for processing and value added activities. This should improve competitive cost structure for agro-processors in Nigeria, reduce the absorption of capital and operational costs and make them competitive in domestic, regional and global markets. The SCPZ and ABIR in Kogi State is one of 6 such zones in Nigeria and Cargill Inc., which holds a 60% share in the Nigerian starch market, has expressed interest in setting up a starch processing and an animal feed plant in the CSCPC Kogi and to establish a 30,000ha farm to supply these factories. This large scale Foreign Direct Investment is likely to have a signal effect and result in other investors following in due course. The Cargill farm and factories itself are expected to offer far reaching benefits including but not limited to the creation of more than US$550 million per year of additional incomes for local farmers and labourers. The key value addition is that the yield of professionally managed cassava farms is with 25 t/ha 66% higher than that of artisanal cassava farms (15 t/ha) and that the starch processed from this cassava farm replaces large parts of the starch presently imported by Cargill Inc. for the Nigerian food and beverage market. It is expected that around 7,500 farmer-households will be engaged in this value chain as Contract Farmers and an additional 1,000 as labourers. 1.2 Project Development Objective (PDO) and Guiding Principles of the SCPZ The Project Development Objective (PDO) is to support agricultural productivity growth and value-addition of targeted small and medium scale farmers by facilitating inclusive public and private investment in selected agribusiness clusters. The concept of the Staple Crop Processing Zones under ATA as proposed by the Federal Government of Nigeria is based on the following three guiding principles: (i) take an integrated approach to the value chain by addressing critical upstream and downstream bottlenecks and facilitating market linkages; (ii) offer a superior operating environment that reduces the cost of doing business, and iii) take a private sector-led approach. The Operating Principles are the following; (i) investment-driven strategic partnerships with the private sector; (ii) integrated value chain approach; (iii) Self-sustaining, government-support and private sector managed. The SCPZ program aims to channel infrastructure investments to facilitate efficient value chain linkages and reduce the cost of doing business, and improve the competitiveness of Nigeria’s agro-industrial production. By creating an enabling business environment around selected value chains clusters, the FGN and State Governments seek to attract private sector investors to set up processing plants in high food production areas, in order to boost import substitution, create wealth opportunities for farming communities, reduce post-harvest losses, create sustainable employment in agro-production, processing and related activities, and drive rapid rural development. In general a SCPZ consist of a core area of about 250 ha designated to host processing plants and other post-harvest activities, and the Agribusiness Investment Region (ABIR) which is the immediate surrounding production catchment area (30km around the core area) which is critical to ensuring adequate feedstock supplies to the SCPZ. The project approach to the Government’s SCPZs Program consists of test running the concept gradually in one of site, as an integrated agribusiness supply chain project, with strong farmers –agribusiness linkages aim to overcome the multiple, interlocking constraints in infrastructure provision and productivity growth along agricultural supply chains. The Project will focus its support on the cassava supply value chain in Kogi State, partnering with a leading global agribusiness company (Cargill) committed to pioneer industrial processing of cassava in Kogi State as the anchor investor in the Alape SCPZ site. The Project will also support the FGN to gradually expand the Program with an open window for technical assistance to a limited number of states with strong business case while developing a based framework developed and from Lessons learnt from the Alape SCPZ, in term of technical and institutional design, land safeguards management, partnership with investors and engaging with communities and other stakeholders. Kogi states net position in cassava production and business environment makes it a natural candidate to host the first model SCPZ. Identification of SCPZ sites across the country benefited from the use of available knowledge and evidence. The areas designated for the SCPZ including that of Kogi are based on the findings of spatial analysis in 2012 based on following selection criteria: agricultural potential, proximity to production clusters, and existence of clusters of agro-industrial activities, competitiveness, business environment for the private sector, and the state governments commitment to buy-in the project. For example, Kogi state is the largest producer of cassava in Nigeria. In 2012 alone, Kogi state produced over 4 million MT of fresh cassava tubers. In addition to being the largest producer, Kogi is also one of the states with significant net cassava surpluses making it a natural cluster for raw material supply. Related to net production position is the fact that cassava is not a major staple in Kogi state. In terms of enabling environment, World Bank doing business report ranks Kogi seventh (7) out of 36 States with respect to starting a new business. 1.3 Project location The proposed location spans across five Local Government Areas of Kogi State, Nigeria namely::Kabba-Bunu, Lokoja,Okehi, Adavi and Ijumu as depicted in Fig 1.1 although the exact location of each potential investments that would be financed under the Project is not yet known. Fig. 1.2 depicts the Proposed SCPZ and global 30Km radius of the ABIR 
(FMARD/UNIDO,/MAHINDRA 2013) Figure1.1: Map of Nigeria showing Kogi State and the Proposed SCPZ & ABIR catchment area |