By Adewale Kupoluyi

The importance of agriculture in economic development cannot be overstated. Despite the strategic place that agriculture occupies, many financial institutions are unable to extend necessary support as a result of some gaps that need to be closed, if this sector is to remain relevant in the scheme of things in the country. The webinar series are designed to educate the Nigerian business and legal communities on matters affecting the local business environment, and how to navigate the terrain with ease.

This is the position of panelists during the Nigerian Bar Association Section on Business Law (NBA-SBL) Business Law Weekly Season 3, Episode 2 with the theme: “Identifying Challenges in Agricultural Financing: Bridging the Gaps between Financial Institutions and Agribusinesses,” which was put together by the NBA-SBL Agriculture Law Committee. The discourse was moderated by the committee’s Secretary and Editor-in-Chief of FarmingFarmersFarms, Dr. Adewale Kupoluyi, and hosted by the section’s Chair, Aderonke Alex-Adedipe, who was represented the Vice Chair, Joshua Daranijo.

According to the Head, Credit and Marketing Department of NIRSAL Microfinance Bank, Anulika Ijomah, what should be done to change this narrative of not funding agribusinesses properly is to make governments at all levels to give banks soft landing such that loans can be quickly and easily disbursed to farmers and the issue of collateral is resolved. She said that ministries of agriculture should handle extension services and properly train farmers for them to understand agriculture as a business and not seen as mere farming exercise. Ijomah informed that the Nigerian Agricultural Insurance Corporation (NAIC) was set up specifically to provide agricultural risks insurance cover for Nigerian farmers, adding that the government must subsidise farm mechanisation and adequately monitor farmers from the first day of farming up to the moment of harvesting.

The NIRSAL official called for wider conversations between the government and all parties involved in agricultural financing, noting that the required resources had to be provided, and suppliers certified while the issue of insecurity is urgently tackled. She revealed that her bank was ready to assist prospective clients in processing their loans and also do follow-ups after disbursements. She noted that “There is need for wider conversation with government and all parties involved in the agribusiness should be duly informed and there should be proper monitoring of farmers from the first day of production to the point of harvest with subsidised mechanised farming. Our product can align with every phase of the agricultural value-chain, but depending on the farmer’s behaviour, they should present their proposals well for them to finance. Lack of knowledge, cost implication and monetary evaluation are some of the issues farmers are facing.”

Ijomah, however, urged fresh starters in agribusiness to understand how the venture works, saying they must devote their valuable time for the business because of its delicate nature. They should equally have their markets and be sure of what they want to do. Reeling out some of the problems of funding agricultural businesses, the panelist pointed out major ones to include insurance coverage, inability of farmers to manage disease, land leasing, inferior quality of farm inputs, global warming and inadequate collateral, among others. On his part, the Field Officer, ETG Beyondbeans, Dr. Olorunfemi Malomo has made a case for synergy between NIRSAL and the National Orientation Agency (NOA), adding that the agripreneur should be well-informed on available opportunities. He posited that communication was key, adding that farming products should be made affordable and accessible to agripreneurs at the grassroots, saying that the products provided by microfinance banks should be insured.

“We should get rid of organisation bottlenecks as they affect agricultural production. There is a gap between financial institutions and agribusinesses and that many farmers are yet to identify where to get loans or grants. Farmers should be keeping records to make it easy for them to access loans from financial institutions, they should do feasibility studies, engage experts, and know the available resources,” he added. Dr. Malomo revealed that Nigerians love too much of imported goods, saying they should rather change this disposition and patronise locally-made goods in order to help the economy, noting that undue organisational bottlenecks should be look into such that loans can be quickly disbursed to farmers with stern warning to prospective agripreneurs to have funds that would cater for the whole agricultural cycle, saying if funds were not available, they should not bother to start the business at all.

In summary, the parley was really a worthwhile effort that has gone a long way in identifying challenges in agricultural financing in a bid to bridging the gaps between financial institutions and agribusinesses. Getting this done and turning things around would happen when governments at all levels give banks soft landing to make credits to be disbursed to farmers with little or no collateral, when ministries of agriculture handle extension services and properly train farmers to understand agriculture as a business, subsidising farm mechanisation, better monitoring of farmers, making starters in agribusiness to understand how the business works, enhanced communication with farmers as well as patronising agricultural insurance, to mention a few.

The Nigerian Bar Association comprises three professional practice sections, viz: Section on Legal Practice (NBA-SPL), Section on Business Law (NBA-SBL), and Section on Public Interest and Development Law (SPIDEL). The practice sections are designed to equip NBA members with necessary skills for the advancement and exploits in the legal profession. The NBA-SBL was established 20 years ago and has at its apex, a council that is currently chaired by a seasoned lawyer and Managing Partner, Odujinrin & Adeoye, Dr. Adeoye Adefulu with other members in sector-focused committees, such as the Agriculture Law Committee that were established to cover existing and new areas of law with a view to enhancing commercial law practice in Nigeria.

Dr. Kupoluyi is the Secretary, Agriculture Law Committee, Nigerian Bar Association Section on Business Law (NBA-SBL).

By Opeyemi Bamidele

On June 13, precisely 44 days away from today, the tenth National Assembly—the Senate and House of Representatives—will mark its first anniversary. The anniversary will take place only a day after Democracy Day, a truly historic national day statutorily set aside to commemorate the restoration of democracy in Nigeria in 1999.

The road to this historic day was indeed tortuous, starting on June 12, 1993. This was the day that eligible Nigerians overwhelmingly cast their ballots for the then presidential candidate of the Social Democratic Party (SDP), the late Chief M.K.O. Abiola. But the government of General Ibrahim Badamosi Babangida, the first and only military president Nigeria ever had, annulled the election outcome on June 24, 1993, contrary to popular will.

The process was annulled even when the SDP had already polled 58.36 percent of the counted results, leaving the National Republican Convention (NRC) with only 41.64 percent. The annulment was perhaps the crudest political decision that any government ever made in the history of this nation, taking cognizance of the diverse ugly events that followed it.

Yet, the quest for the restoration of people’s mandate never died until the federal government finally recognised Chief M.K.O. Abiola was the winner of the process. And its implications were grave and unquantifiable for the nation at large. First, the decision prolonged the reign of tyranny by six good years, thereby inflicting varying degrees of setbacks on our economy and polity.

Besides, it culminated in the suspension of the National Assembly, the foremost democratic institution, with the seal of the people’s approval. It perhaps birthed the darkest era in history, which almost indelibly bruised the image of our nation before our long-time development partners and even the entire global community.

That era has now folded into the stinking armpit of history. Its stench keeps reminding us of the gory accounts of what we all suffered at the hands of the late tyrant. But we are now gradually building a democracy that is efficient, proactive, responsive, and vibrant to address the roots of our prevailing challenges. That democracy will officially enter its silver age precisely on June 12.

At the same time, we will be marking the first anniversary of the tenth National Assembly. It will indeed be a day of double celebrations to reflect on how we started, the grievous challenges that beset us on the path to freedom, and the measures we need to adopt to build a truly responsive democracy. And the day will help us put into context the gains of practising a democratic system for 25 unbroken years amid diverse challenges.

For 12 months or thereabouts, we have no doubt recorded moderate political payoffs, considering various interventions we have initiated to deliver collective prosperity, spur national cohesion, and set our fatherland on the path to irreversible growth. Even though we have been able to chart an entirely new path for Nigeria, it is not yet Uhuru, given the enormity of socio-economic and political challenges we are still facing as a federation.

Ahead of the anniversary, however, we are reconvening in the newly renovated hallowed chambers of the National Assembly to discharge our responsibilities as enshrined under Section 4 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended). This is ostensibly an invaluable addition not just to the federal legislators but also to Nigeria, a federation of over 227 million people that the world always looks forward to as the hope of the black nations.

For two consecutive years, we relocated to the committee room on the ground floor of the New Senate Building to conduct core legislative business. Likewise, the House of Representatives moved its sessions to the main committee room on the ground floor of its wings. This movement was due to the intolerable conditions of the two chambers where we were conducting legislative business.

What were the conditions that compelled the legislators to relocate to makeshift chambers that were obviously unconducive and unsuitable for the conduct of legislative business? The worst of such conditions was the leakage of the roofs, which regularly disrupted plenaries and even caused damage to facilities within the two chambers.

Also, the cooling system was dysfunctional, especially in the central lobby, most committee rooms, and other parts of the complex. This no doubt created an unacceptable environment that inhibited the speed at which we were discharging our responsibilities. Among others, there were also challenges with the plumbing system, low-voltage equipment, and public address system, among others.

Each of these challenges necessitated the need to reconfigure, rehabilitate, and upgrade the entire National Assembly Complex to what it is today. After two years of comprehensive maintenance exercises, we now have state-of-the-art chambers where legislators can sit and work seamlessly. We now have a truly world-class work space fitted with modern equipment and technology that will no doubt aid the conduct of legislative business.

Our first thanks go to former President Muhammadu Buhari, the GCFR, and the Federal Capital Development Authority for supporting the budget proposal for the renovation of the entire complex in 2022. We also appreciate President Bola Ahmed Tinubu, GCFR, and Minister of Federal Capital Territory, Mr. Nyesom Wike, CON, for prioritising the renovation of the complex, which has now been fully open for parliamentary activities. Henceforth, we shall conduct the national legislative business in the newly renovated chambers.

Now that we have resumed full legislative business, the weeks ahead promise to be busy and engaging for all legislators alike. In part, this may be associated with issues of national priority that require immediate parliamentary intervention. It may also be connected to diverse bills, for which we are duty-bound to expedite their passage in order to deepen the roots of public governance nationwide.

In the coming weeks, therefore, we will be interfacing with the core managers of our economy to ensure stability in our fiscal and monetary spaces. We understand the value of the naira has been galloping in the last five weeks. During Easter, for instance, the naira recorded 32.6 percent appreciation. Just after Eid-el-Fitr, the naira further appreciated by 42 percent. Currently, however, its value has again dropped, hovering between ¦ 1,250 and ¦ 1,300.

Obviously, the galloping value of the naira simply suggests that we need to adopt a collaborative approach first to strengthen existing measures and work out alternative measures that will decisively address the root causes of its depreciation. It also suggests the need to further carry out purpose-driven oversight of fiscal policies, robust engagement with the core managers of the economy, and initiating strategic interventions aimed at supporting real sectors.

Also, the need to recalibrate our security architecture will be at the core of our legislative priorities. Nearly all stakeholders now agree that the security architecture is no longer responsive enough to guarantee the security of lives nationwide. As demonstrated during the national policy dialogue recently organised by the House of Representatives, we are gradually building a national consensus on how best we can address our security challenges.

Security is everything, whether in Nigeria or elsewhere. It is the main pillar on which the state system was built. And its absence is at the root of other heinous challenges we are facing today. Aside from its human cost, insecurity is a source of economic harm that we must permanently stop as soon as we can. It has driven thousands of farmers from their farmlands, complicating the food crisis we are working hard to address. It is also a critical factor responsible for the decline in the flows of foreign direct investment into this nation.

All these issues deserve more decisive legislative attention than at any time in history. The process has already commenced with the inauguration of the Committee on the Review of the 1999 Constitution. The committee, chaired by the Deputy President of the Senate, Senator Jibrin Barau, has been collaborating with critical stakeholders to work out an entirely new security architecture that responds more efficiently to our security challenges.

But the National Assembly cannot do it alone, and neither can the Presidency. It is a collective responsibility for all critical actors: the media, civil society, traditional institutions, private sector religious bodies, and all socio-cultural groups. We are all under obligation to play pivotal roles in the task of rebuilding a federation that works for all.

Bamidele, leader of the 10th Senate, writes from Abuja.

By Constantine ‘Labi Ogunbiyi

The African continent stands at a pivotal juncture in the global energy sector, with abundant oil and gas reserves offering immense potential for economic growth. However, while the continent holds significant promise, navigating the upstream oil and gas sector in Africa comes with a plethora of risks and potential setbacks that demand careful consideration and strategic planning. This is against a backdrop of cutbacks in international capital for carbon-intensive oil and gas developments and increasing competition for the same sources of capital. Innovative financing solutions are thus required to fill the void, but can only be truly successful if tailored to specific needs and adopted and respected by all stakeholders.

Nigeria, Africa’s largest oil producer, epitomises the complexities and opportunities within the continent’s energy sector. Over the past decade, the Nigerian oil and gas industry has grappled with insecurity, asset vandalism, and community unrest, leading to a decline in investment. This coupled with the need for the sanctity of contracts and a properly structured fiscal framework has seen investment in the sector decline to about US$5 billion per annum from highs of about US$22 billion per annum in 2012.

Nigeria has an abundance of unexploited discovered natural gas (as well as significant prospective gas resources), now heralded as a “clean” transition fuel amidst global energy shifts. Nigeria should seek to attract significant investment during this transition era (which has also seen crude oil prices rebound) to take full advantage of this, thus retaining the value of crude oil and gas resources to enable it to position itself for its energy transition (towards net zero) agenda. A just energy transition, the paradigm that gained impetus at the December 2023 COP28 Conference, is intended to decelerate financing fossil fuel developments while supporting those most vulnerable to the impacts of climate change when facilitating the transition to clean energy. This is not simply a tweak to existing systems; it is a fundamental transformation towards a cleaner, more sustainable future. This shift is driven by environmental concerns, the changing balance of power on the global stage, and awareness that the energy-producing nations in the Global South (which produce only a fraction of global emissions) should be given a chance to “catch up” industrially, technological advancement as consumer demands. It is estimated that the country needs about US$25 billion of annual investment in the next 10 years to achieve crude oil output of three to four million barrels per day and 3 bcf per day of gas production for domestic consumption (an ambition). A lack of available infrastructure, whether because of existing compromised infrastructure through age or sabotage or simply a lack of new investment, and competition for capital regionally, poses challenges that will need to be overcome to achieve this. Inadequate infrastructure impedes the development and operation of oil and gas projects in Africa, increases project costs, delays timelines, and heightens operational risks.

The new Government has declared that it is “open for business” and will take urgent steps towards solving the fiscal, regulatory, security, and other issues discouraging investment and operations in the nation’s petroleum sector – something that is urgently required to help to push its oil and gas production to the ambitious levels being targeted. The mechanisms are in place – the Petroleum Industry Act (PIA) has done a lot to bring an enabling framework to the industry, including by allowing the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries to raise capital on their own balance sheets, whether by divestitures or development partnerships on their blocks (including risk service contracts, financial and technical service agreements and the likes), crude forward sales, debt or equity capital raisings, etc. Still, there is a need to focus more on implementing the PIA in a manner that restores investors’ confidence and boosts oil and gas production, ultimately increasing jobs, the country’s earnings, and prosperity. Whilst international commodity traders have increased their activity and funding of oil production in Nigeria, they rarely support the development of appraisal and near-production assets. Access to innovative capital structures for such capital-intensive projects, involving a more risk-reward approach will be key to developing such assets, as will the deepening of regional capital markets to bolster the capital available from institutions such as the African Export-Import Bank and planned new initiatives such as the African Energy Bank. Effectively, more “home-grown” solutions will be required.

As international oil companies shift focus to deep offshore and gas-rich assets, indigenous companies and smaller operators are stepping in to fill the void. However, accessing capital remains challenging. Innovative financing models, such as the contractor risk service  model, offer a promising solution. This model, which involves contractors taking financial risks and receiving payment from production, incentivizes efficient asset development while mitigating risk for owners and operators.

The contractor taking such risk, is effectively a co-financier of, and investor in, the development of the oil block – ensuring a service that would otherwise require immediate payment, to benefit from payment from oil and gas production (therein lies the contractor risk).

The success of such models hinges on the support of all stakeholders, including operators, joint venture partners, financiers, regulatory authorities, and local communities. By aligning incentives and sharing risks, these partnerships can drive sustainable development and enhance investor returns. The recent completion of the FSO ELI Akaso infrastructure project by the Century Group (CG) (part of an alternative crude oil evacuation system (ACOES)), facilitated by the contractor risk service model, exemplifies the potential for collaboration to unlock value and foster growth. The ACOES is being developed as a result of the need to enhance production and supply security from oil blocks in the Eastern Niger Delta due to infractions and prolonged outages of the Nembe Creek Trunkline (historically one of Nigeria’s major oil transportation arteries evacuating up to 150,000 bopd of crude from the Niger Delta to the Atlantic coast for export). The CG model is “Made-in-Nigeria-for-Nigeria” but can be rolled out regionally (and globally too), in countries where access to capital for oil and gas developments is tough. Contractors work in a vacuum: the aim of which is to optimise oil production to ensure that their clients thrive so that they do too. However, they rarely take financial and production risk executing a “pay-as-you-go” model (often including mobilisation and other hefty prepayment-type fees), which can leave operators hanging where assets under-perform. They also get the job done without involving themselves in the issues that may affect joint venture partner relationships.

Local and international investors, including UK-listed San Leon Energy plc, World Carrier Corporation, and GT Bank plc have invested heavily in Energy Link Infrastructure Limited (ELI), the sponsor of the ACOES and owner of the FSO ELI Akaso and relevant pipeline infrastructure to develop the ACOES. With the advent of COVID and a lack of production available from anchor clients, ELI needed to look for alternative sources of capital to ensure that the FSO ELI Akaso is ready for operations. Without CG’s involvement in a contractor risk service model, the FSO would not be operationally ready and now established as a terminal for oil export. As the Akaso starts to take on barrels from various oil producers, the business should thrive. CG, as an investor by the application of its contractor risk service model, should also be rewarded and feted for having stood by the business at a time when access to alternative capital was proving difficult. With the success of this approach, CG is ensuring that the contractor risk service model should be considered by the industry as an alternative, proactive, and additional funding source for the development of energy projects.

Looking ahead, achieving sustainable development in Africa’s oil and gas sector demands collaborative action from all stakeholders. Local investors, operators, and contractors play a crucial role in de-risking opportunities and crafting an appealing investment narrative that attracts capital. By leveraging local expertise and fostering partnerships, these stakeholders can unlock the sector’s full potential while mitigating risks. Regulatory frameworks also play a pivotal role in shaping the investment landscape. It is imperative that these frameworks prioritize ease of doing business and uphold contract sanctity to instil confidence among investors. Additionally, addressing bottlenecks to investment and exits is critical for maintaining investor interest and sustaining growth momentum. Addressing the need to resolve the long-standing saga and delay in the consummation of the $1.3 billion ExxonMobil sale of its 40% stake in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Nigeria Plc, the Nigerian Minister of State for Petroleum Resources, Heineken Lokpobiri said on 16th April 2024: “Now that the whole world is campaigning against investment in fossil fuel, if we close this transaction and Seplat expands their investments, Bonga North, which is predicated on that resolution, comes on board, and the whole world will know that Nigeria has become a new investment destination and that is the objective of this government.”

In charting the course for Africa’s upstream oil and gas industry, daring innovations and strategic partnerships will be indispensable. By embracing risk and seizing opportunities, the continent can harness its energy potential to drive economic prosperity and sustainable development for generations to come. More local investors, operators and contractors (like Century Group) will need to step up to help to de-risk opportunities and ensure the investment narrative is attractive, properly articulated and understood. With traditional international financing techniques becoming more difficult to secure for oil and gas projects, the contractor risk service model is an invaluable additional tool to ensure the continuing development of energy projects.

About the Author

Constantine ‘Labi Ogunbiyi has been involved in the energy (including renewables), fintech, and logistics sectors as an investor, Strategic Advisor, and/or Director on several boards. He has more than twenty-five years of experience in international capital markets, private equity, acquisition, structured, trade and project finance, and public and private partnerships in the African energy, technology, and infrastructure sectors, in particular. Labi,  was a founder and Executive Director of Afren plc responsible for business development, strategy, and growth, leading Afren’s negotiating team in Nigerian acquisitions and equity and debt financings (capital raising of more than $1.7 billion) between 2005 and 2009. In 2009, he founded First Hydrocarbon Nigeria Limited (FHN), a leading indigenous upstream oil and gas exploration and production company in Nigeria, and functioned as its Chief Executive Officer, selling the business in 2013.

Presently, he runs his family office, Phoenix Generation Limited, a direct investment and strategic investment advisory service company. He holds Legal Qualifications from the Universities of London (King’s College), Passau (Germany), and the Oxford Institute of Legal Practice.