“NIGERIA’S AGRICULTURE ACCOUNTS FOR A QUARTER OF MY BUSINESS”_ SAYS MR. MOHIT ARORA STANDARD BANK DIRECTOR

Posted by Ifedayo Oshin on Monday, February 3, 2014 Under: News Stories


Mr. Mohit is the Director of Agriculture for Standard Bank Africa. He is an expert in commodity finance and global agriculture with experience across global markets in US, Asia, Latin America and Africa. Mr. Mohit holds an MBA in Agribusiness, a Master’s degree in Agricultural Genetics/Biotechnology and a Bachelor degree in Agriculture. He was a guest speaker at the Brazil-Africa Leadership Forum held on the 27th of November 2013 at the Sandton Hilton hotel, Johannesburg. Our editor-in-chief had a chat with him about the challenges of Africa’s agriculture and lessons from Brazil as well as the role of Nigerian agriculture in Standard Bank’s agricultural business.

Mr. Mohit recommended that African countries need look at the examples of countries such as India, Thailand, Vietnam and Brazil who have used social transformation to successfully integrate their poor people into wider democracy. He stressed the need for true independence in four key areas as identified by the four countries; technology, financing, infrastructure and risk management.

“So, once you bring true independence around these four factors to your common people, then the gap will shift.  So, when I say truly independent what I  mean is that, there is the thinking in Africa that the big farms will help the small ones, but as we know if we are both in the same business, we will not let each other make too much money”, he explained.

The challenge is to make the platform even for both the small and big operators without making one guy dependent on another. This Mr. Mohit believes can be done building true independence around the identified four factors rather than pushing a lot of small farms on a big farm, which can only result in a new type of dependence. He cited the example of Brazil:

“If you look at the Brazilian example, technology is free and available to everybody. There are public sector banks which lend. The infrastructure (storage, power and roads) is available and work for everybody. Also, risk mitigation is very important. So, government in many countries should set up a proper action platform and minimum price support for a lot of these farms. Today in Africa, small farmers are selling to big farmers. He may or not get a fair price. But if we have government platform, like the one in Thailand and India, you will be assured of production”.

Mr.  Mohit does not believe that having too many small farmers is a disadvantage to Africa’s agriculture; rather, he argued that it offers the continent a competitive advantage because land-holding in Africa is not concentrated in the hands of a few people and therefore redistribution of capital is easier. According to him development of infrastructure should be the focus in countries where the majority of the farmers are poor. The solution is for government to pay serious attention to factors such as financing, technology and risk management while simultaneously empowering the people to save more so as to reduce costs. By so doing Mr.  Mohit predicts:

“Then, everybody can try to get richer or get to the middle class. Then, things work and there is more balance in the country; more social stability and effective democracy. So, the fragmented land holding and small farmers are God’s blessing, all a country needs to do is to help farmers to save and come up.

Mr. Arora feels strongly that Africa should play fewer roles in world food production; rather the continent should focus inwardly in making food production surplus for its increasing population. He questions the economic logicalness of commodities exports in Africa.  “Many times, there is no economic logic for the exports because we can make more money by selling to Africans themselves. For instance, sugar in Kenya is almost two times the price of sugar in India. And they are very similar countries, so why would I export to India when I can sell to Kenyans. And you don’t have to deal with counterparts or currency issue and other logistics”.

Also, Mr. Arora does not see any social benefits in African exports with the strong indication that the continent’s population will double with high number of young people. Consequently, producing and distributing locally makes more sense. More so, “the per capital consumption of Africa is much higher because of cultural reasons. Africa is going to consume more highly valued added food like fruits, vegetable and salad”, he observed.

Mr. Arora argues that poor infrastructure and high infrastructural costs are the twin bane of economic and agricultural development in most African countries. He laments that “it is so hard to get anything out of Africa. There are hardly any sea ports or roads. Historically, Africa does not have many sea ports”. He explained that the cost of transport makes sugar export, for instance from Kenya to India, uncompetitive as a result of small profit margin and other logistics inconveniences. Even with the availability of infrastructure, export business will still remain expensive for Africa. This, he attributed to the high infrastructure costs given the continent’s large population spreads over land mass that is ten times the size of its population.

Mr. Arora noted that South Africa is an exception because of its sea ports in Durban and Cape Town. And this, he noted, is the reason why South Africa is so much developed because the cost of transportation is low. “How much you save as a country in terms of capital generation depends on where you are in the global map”, he affirmed.
Mr. Arora considers this geographical situation a benefit rather than a challenge to Africa. “I would say that it is a benefit, if you can grow food for your people, make some money and keep it in your pocket”.

As the Director of agriculture for Standard Bank, Africa, Mr. Arora confirms that Nigerian agriculture is the bank’s biggest business in Africa. “It accounts for a quarter of my business, for sure. It is very big. It has some of our best talents. We will continue to grow our Nigerian business. It is the biggest contributor that we have”, the agric-banker revealed.

Going forward, the standard bank director said that the bank “will continue to stay focused on being relevant in the emerging market; the BRICS are coming to Africa, and that is our strategic focus. Conference such as  this help, so we can know more about Brazilian people coming to Africa, so that we can help and advise them and provide landing”.


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