By TBY | Nigeria | Jan 28, 2015
Weeding Out Corruption
The Nigerian government has used handsets to address a perennial problem blighting the agricultural sector.
For four decades, the Nigerian federal government sought to support its agricultural sector through the procurement and distribution of fertilizer to the farmers. The federal government procured fertilizer, after which it sold the fertilizer to distributors, using a subsidy scheme to offset pressures on fertilizer prices. Unfortunately, the distributors would often sell the fertilizer for higher prices, effectively limiting the usage of fertilizer by Nigerian farmers. During those four decades, Nigeria spent approximately $5 billion on farm input subsidies, but only 11% of the farmers actually received fertilizer, resulting in subpar yields and output in the agriculture sector.
Seeking a way to end the corruption and massive rent seeking, the Nigerian Minister of Agriculture and Rural Development Dr. Akinwumi Adesina introduced the use of an Electronic Wallet scheme for farmers in 2012, operated through the use of mobile phones. Nigeria is the African continent’s largest mobile market with over 125 million subscribers and a 75% penetration rate as of early 2014 according to Budde.com; encouraging numbers that the government scheme therefore, prudently leverages. Through this scheme, which was adopted within ninety days, farmers receive subsidized seeds and fertilizer vouchers on their phones, which they can subsequently use to purchase inputs directly from the agro-dealers, cutting out the corrupt middlemen that spoiled the hitherto existing system.
In the two years since its introduction, the Electronic Wallet scheme has reached over 14 million Nigerian farmers. 10.3 million of these are from the Northern regions of Nigeria, indicating the growth-fostering effect the scheme has on this relatively poorer part of the country. Furthermore, 2.5 million female farmers who used to be largely undermined in subsidy distribution have received subsidies as a result of the scheme. Estimates are that the Electronic Wallet has beneficially impacted on the lives of 40 million Nigerians in rural households, empowering them, and improving their overall food security.
The scheme has served as a catalyst for private sector investment in agriculture, opening the market for seed and fertilizer companies. The scheme’s success in reducing corruption in Nigeria’s agriculture sector has also attracted the banks to the sector. Convinced that agriculture has become a more legitimate business, banks have demonstrated that they are willing to increase lending to seed and fertilizer companies in particular, and have begun prospecting other lending options in different parts of the agriculture sector.
In a way that reaffirms the progressive nature of Nigeria’s Agricultural Transformation Agenda, Nigeria was the first country in Africa, and in the world, to develop the Electronic Wallet scheme. Recognizing the significant benefits that the scheme has generated for Nigeria, the African Union has adopted the E-Wallet with a view to ending fertilizer corruption on the entire African continent. Furthermore, countries like Brazil, India, and China have also voiced their interest in adopting the scheme in their respective agricultural sectors.
The Electronic Wallet Scheme shows that long-term institutionalized corruption can be ended surprisingly quickly through a synergy between technology, and visionary and determined policy makers such as Minister Adesina and his civil servants in the Ministry of Agriculture and Rural Development, ultimately resulting in the socio-economic development of 40 million Nigerians and counting.