The African Development Bank (AfDB) has expressed significant concerns regarding the slow progress of the first phase of Nigeria’s Special Agro-Industrial Processing Zones (SAPZ) project. This ambitious initiative, approved in December 2021 with a $210 million loan from the AfDB and the Africa Growing Together Fund (AGTF), aims to revolutionize Nigeria’s agricultural sector by establishing processing hubs, bolstering infrastructure, and enhancing agricultural productivity. However, more than two years after its approval, the project has been plagued by delays, administrative inefficiencies, and capacity gaps, leading to a dismal disbursement rate of only 1.61% of the total loan as of December 2024.
The AfDB’s Implementation Progress and Results Report paints a bleak picture of the project’s current state. While some progress has been made in states like Kaduna, Cross River, Oyo, and Ogun, with bidding documents cleared and procurement processes underway for Design-Build-Operate (DBO) contracts, Imo State has yet to commence any significant activity. This inaction has prompted a stern warning from the AfDB, threatening loan cancellation if the state government fails to initiate implementation immediately. Similarly, Ogun State has been instructed to provide an acceptable Service Level Agreement to secure continued funding, highlighting the bank’s growing impatience with the project’s overall management.
A major impediment to the project’s success is the weak capacity of the project staff at both the national and state levels. The National Project Coordinating Unit (NPCU) and Participating State Implementing Units (PSIUs) have struggled with financial management, procurement procedures, and adherence to environmental and social safeguards. In response, the AfDB has deployed consultants to provide hands-on support and training to project staff, aiming to strengthen their expertise and ensure compliance with the bank’s fiduciary requirements. This capacity building is crucial for effective project implementation and the efficient utilization of funds.
Despite the project’s initial promise to create 500,000 jobs and attract $1 billion in private sector investment, these targets remain distant. No tangible progress has been reported in these areas, and crucial infrastructure components like energy provision, administrative buildings, optical fibre installations, and feeder roads remain largely undeveloped. This slow progress raises serious doubts about the project’s viability and its potential to deliver the anticipated economic benefits. The AfDB’s evaluation reflects this underperformance, with the implementation progress rating still lagging despite an improvement in the development objective rating from ‘unsatisfactory’ to ‘satisfactory’.
Recognizing the urgency of the situation, the AfDB has implemented several corrective measures to expedite the project’s implementation. These include providing technical assistance through expert consultants, streamlining procurement processes, engaging directly with state governments to ensure compliance, and mandating the submission of quarterly project updates for close monitoring. These interventions aim to address the identified bottlenecks and accelerate progress towards achieving the project’s objectives. The AfDB has stressed the critical need for continuous monitoring and proactive problem-solving to overcome the existing challenges and ensure the project’s ultimate success.
Despite the setbacks experienced in the first phase, there is a renewed focus on expanding the SAPZ initiative. The AfDB has successfully mobilized $2.2 billion for the second phase of the project, which will encompass 24 additional states over the next three years. This substantial investment reflects the continued commitment to leveraging agro-industrialization as a driver of economic growth in Nigeria. The second phase aims to build upon the lessons learned from the initial phase and implement strategies to overcome the challenges encountered, ensuring a more efficient and impactful rollout. While the first phase has faced significant hurdles, the substantial funding secured for the second phase, along with the AfDB’s continued engagement and corrective measures, offer hope for the project’s future and its potential to transform Nigeria’s agricultural landscape. The key now lies in effective implementation, improved capacity, and close collaboration between all stakeholders to realize the envisioned agricultural transformation and economic benefits.
