Grain storage and aggregation

Grain storage and aggregation

Photo by Shutterstock

Grain storage and aggregation

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< 5% (CAGR)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Zero Hunger (SDG 2)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12) Climate Action (SDG 13)

Business Model Description

Construct technologically improved grain storage silos and provide transportation services.

Expected Impact

Increase value added in food chains, prevent food waste, strengthen economic growth and generate decent jobs.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Nigeria: North West
  • Nigeria: North East
  • Nigeria: North Central (Middle Belt)
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
About 25.5% of Nigeria’s population lacks adequate and improved nutrition.(1) Similarly, data from the National Bureau of Statistics suggests 26.4% of the population experienced severe food insecurity in 2016.(1) The Sustainable Development Report ranks Nigeria number 48.0 for SDG 2 (Zero Hunger). While performance against this Goal has improved, major challenges persist.(2)

Policy priority
The government intensified efforts to improve agricultural yield, and investments aim to improve agricultural infrastructure.(1) Policy priorities outlined in the Economic Recovery and Growth Plan aim to: increase agricultural GDP (gross domestic product) to NGN 21.0 trillion in 2020 at an average annual growth rate of 6.9%; reduce food imports; and become a key exporter of agricultural products.(3)

Gender inequalities and marginalization issues
Agriculture and trade account for the majority of Nigeria's employment opportunities. Most people in these sectors work informally (92% of those employed in agriculture, and 56% of those employed in trade), and so rely on daily wages. Generally, informal workers have no pension or life insurance, and have limited health insurance coverage. They are more exposed to shocks, especially to their health, and are vulnerable to poverty and hunger. Micro, small and medium enterprises (MSMEs) are most likely to be affected by the upcoming recession, and will take longer to overcome the economic impacts of COVID-19.(4)

Investment opportunities introduction
The government is also considering strategies such as providing irrigation infrastructure to enable year-round production to boost agricultural productivity.(3)

Key bottlenecks introduction
The Sustainable Development Report ranks Nigeria number 48.0 for SDG 2 (Zero Hunger). While performance against this Goal has improved, major challenges persist.(2)

Sub Sector

Food and Agriculture

Development need
In 2018, agriculture accounted for 21.2% of Nigeria's GDP (gross domestic product) and employed two-thirds of the working population.(3) Indicators of adult obesity have improved, while indicators of undernourishment have underperformed. Prevalence of stunting in children is falling.(5)

Industry

Agricultural Products

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Grain storage and aggregation

Business Model

Construct technologically improved grain storage silos and provide transportation services.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

< 5%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Nigeria has an active grain market, producing 25 million+ metric tonnes (MT) each year.(6)

Nigeria's grain market is distributed across the country. In terms of supply and demand, it is expected to grow by 2.5-3% each year.(6)

The market is dominated by small and medium scale farmers and traders, with a growing number of commercial grain producers and industrial offtakers.(6)

At the national level, Nigeria recently invested NGN 66 billion (USD 171 million) to establish 33 silo complexes, 25 grain aggregation centers, and 9 units of Blumberg warehouses, which have now been privatized by way of concession.(7)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

> 25%

According to Federal Ministry of Agriculture and Rural Development (FMARD) estimates, the average internal rate of return (IRR) for silo complexes is 57%.(6)

The net present value (NPV) of commercial operation of the silo complexes is NGN 25.8 billion (USD 67 million). On a risk adjusted basis, the private sector will create NGN 4.34 billion (USD 11 million) additional financial value. The estimated present value of the cost of operating the silo complexes is USD 538 million.(6)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

It takes 6-12 months to establish grain storage silos. Therefore an investor will see cash flow in about 2 years.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Capital - Limited Investor Interest

Agricultural financing is generally considered a risky investment. NIRSAL (the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending) is minimizing the risk of agricultural lending via its anchor borrowers programme.

Business - Supply Chain Constraints

Inadequate infrastructure

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

The agricultural sector has been characterized by poor infrastructure including roads, irrigation and storage facilities. This has limited farmers' access to domestic and international markets. The United States Department of Agriculture (USDA) estimates that upwards of 30% of grain is wasted through post-harvest losses.(6)

FAO (Food and Agriculture Organization of the United Nations) estimates that as much as 3 million metric tones – 10% of total supply across all grains – is lost after harvest. Millet was particularly affected in 2011, with losses representing 36% of production and imports. Soybeans, sorghum and maize also all suffer 10-15% losses relative to local production.(8)

Given the current post-harvest loss rates of up to 60% for perishable crops, Nigeria needs to rapidly introduce new storage solutions across its agricultural system.(7)

Gender & Marginalisation

Long term efforts to improve women's access to agriculture and livelihood resources (including land, agricultural inputs and education) requires tackling cultural and gender norms that prevent women’s empowerment. Anecdotal evidence shows women are less likely to gain access to credit, land and other agricultural inputs.(18)

Expected Development Outcome

Investments could: increase agricultural productivity across several value chains; increase food security across the country; reduce post-harvest loses especially for small holder farmers; increase employment opportunities; and boost value chain development.

Investments could open up foreign markets, and therefore increase export opportunities/foreign exchange earnings, as well as the quality and volume of supply chains. Further, improved transparency of grain markets should help support higher revenues by increasing grain sale volumes.

Gender & Marginalisation

Economic Recovery and Growth Plan (NERGP) 2020 target for female population that owned agriculture: 80.8%. SDG target by 2030: 100%.(19)

Primary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty

1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)

1.2.1 Proportion of population living below the national poverty line, by sex and age

1.2.2 Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Current Value

62.6% of Nigeria's population live below the international poverty line: 69% of people in rural areas live below the international poverty line, compared with 51% of people living in urban areas.(18)

46% in 2018.(20)

42.2% in 2017.(18)

Target Value

The Federal Government is implementing a national Social Investment Programme which focuses on providing Social Safety Nets for the poor, welfare for the unemployed and job creation and skills enhancement with a target of creating about 3 million jobs. (18)

21.1% by 2030.(18)

Zero Hunger (SDG 2)
2 - Zero Hunger

2.1.1 Prevalence of undernourishment

2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)

Current Value

25.5% in 2015.(19)

Moderate: 26.4%. Severe 19.6%.(19)

Target Value

Derived ERGP (Economic Recovery and Growth Plan) target by 2020: 17%, by 2030: 0.(19)

Derived ERGP (Economic Recovery and Growth Plan) target by 2020: 17.6%, by 2030: 0.(19)

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Small and medium-scale grain farmers will directly benefit from storage infrastructure. Most lose a significant percentage of their grains through post-harvest losses due to lack of access to storage infrastructure.

Outcome Risks

Health effects may arise due to unsafe use of pesticide and agrochemicals in storage units.

Impact Risks

Alignment risk given production may not be locked into an enterprise model.

Efficiency risk given the high engagement of public bodies in this IOA.

Impact Classification

C—Contribute to Solutions

What

Likely to have positive outcomes such as food security, employment opportunities, foreign exchange earnings, reduction in post-harvest losses.

Risk

Exchange rate fluctuations, market price volatility

Impact Thesis

Increase value added in food chains, prevent food waste, strengthen economic growth and generate decent jobs.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Federal Government Agriculture Promotion Policy: This policy emphasizes the need to engage the private sector in building an agribusiness economy that can meet domestic food security goals, generate exports, and support sustainable income growth.(9)

There is a positive policy environment for private sector participation.

Financial Environment

Financial incentives: Companies engaged in wholly agricultural activities are entitled to unrestricted capital allowances.(15) Funding for agricultural value chain development is available within the Central Bank of Nigeria (Central Bank of Nigeria / Nigerian Incentive-Based Risk Sharing System of Lending / Bank of Agriculture / Nigerian Export-Import Bank).

Fiscal incentives: Section 33(3) of the Companies Income Tax Act (CITA) exempts the income of a company engaged in agricultural trade from paying minimum tax. Zero tariffs are extended for importing agricultural equipment.(15) Tax holidays are available for investing in processing plants in staple crop processing zones.(16)

Regulatory Environment

Land Use Act of 1978: Under this Act, State Governments grant land rights and access rights to the Federal Ministry of Agriculture and Rural Development (FMARD). It also transfers responsibility for outstanding construction contracts relating to the silo complexes and agro-processing unit purchase and installation.(10)

Public Procurement Act 2007: This Act regulates and establishes guidelines for public procurement. It also regulates the scope of action of the Bureau of Public Procurement, which is responsible for contracting and overseeing public-private purchasing (PPP) schemes. (11)

Infrastructure Concession Regulatory Commission (Establishment, Etc.) Act 2005: This Act regulates private sector participation in Federal infrastructure.(13)

Public Enterprises (Privatization and Commercialization) Act, Cap P.18 Laws of the Federation of Nigeria 2004.(12)

National Environmental Standards Regulations and Enforcement Agency (Establishment) Act 2007 (NESREAA) and 33 Regulations made by the Minister of Environment under section 34 of the Act: This Act and the Regulations prescribe environmental management regulation.(14)

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Cold Hub, SGS Nigeria, Sahel Capital, Standard Chartered, Fledge Co, Factor Ventures

Government

NIRSAL (Nigerian Incentive-Based Risk Sharing System for Agricultural Lending), Ministry of Agriculture

Multilaterals

African Development Bank (AfDB), World Bank, International Finance Corporation (IFC), United Nations Industrial Development Organization (UNIDO), United Nations Environment Programme Global Environment Facility (UNEP/GEF), German Corporation for International Cooperation (GIZ)

Non-Profit

Acumen Fund, Raw Material Research, Bill and Melinda Gates Foundation

Public-Private Partnership

Africa Agriculture and Trade Investment Fund (AATIF)

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Nigeria: North West

Grain storage silos are most suited for the northern part of the country, where grain production is highest.
rural

Nigeria: North East

Grain storage silos are most suited for the northern part of the country, where grain production is highest.
rural

Nigeria: North Central (Middle Belt)

Grain storage silos are most suited for the northern part of the country, where grain production is highest.

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.