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The African Development Bank has expressed dissatisfaction over the slow progress of the first phase of Nigeria’s Special Agro-Industrial Processing Zones project, raising concerns about the disbursement of the $210m loan allocated for the initiative.
According to the bank’s latest Implementation Progress and Results Report dated January 30, 2025, obtained from its website by The PUNCH on Sunday, 98.39 per cent of the total loan remains undisbursed more than two years after the project was approved.
The SAPZS-I project was approved in December 2021 as part of efforts to drive agro-industrial development in Nigeria by establishing processing hubs, supporting infrastructure, and improving agricultural productivity.
However, the project has suffered significant delays, leading to warnings from the AfDB and the introduction of remedial measures to hasten implementation.
The report read, “Procurement of supervision consultants for the DBO contractors is at RFP stage in the case of Kaduna State and REOI stage for Oyo, Imo and Cross River State Design Build and Operate bidding documents have been cleared for four states of Kaduna, Cross River, Oyo and Ogun states and Kaduna has already advertised its DBO.
“All these will result in improved implementation, disbursement, and rating in the year 2025. However overall performance status from the time of project approval to date is relatively slow, especially with respect to project disbursement.”
It reveals that of the total loan amount of $210m, only 1.61 per cent has been disbursed as of December 2024.
The ADB was to provide $160m of the total loan, while the Africa Growing Together Fund would provide an additional $50m.
Further checks by The PUNCH showed that AGTF is a $2bn facility sponsored by the People’s Bank of China and administered by the AfDB.
Despite the availability of these funds, the pace of disbursement has been sluggish.
Further breakdown of the figures shows that only 1.93 per cent of the AfDB’s portion of the loan has been disbursed, leaving 98.07 per cent undisbursed.
Similarly, the AGTF’s portion has recorded a disbursement rate of just 0.58 per cent, with 99.42 per cent of the funds yet to be utilised.
The bank identified administrative inefficiencies, weak capacity among project staff, and delays in procurement processes as key factors hindering the disbursement and implementation of the initiative.
The AfDB has also raised concerns about the slow progress in Imo State, which has not commenced any major activities under the project.
Unlike Kaduna, Cross River, Oyo, and Ogun states, which have made some progress, Imo has lagged.
The bank has formally warned the Imo State Government to begin implementation immediately or risk losing its share of the loan.
The report states that the bank has informed “the Government of Imo State on the need to start activities or the bank will recourse to a cancellation of the loan.”
Meanwhile, the bank has also directed the Ogun State Government to provide an acceptable Service Level Agreement to ensure continued funding.
The PUNCH learned that a service level agreement defines the level of service expected from a vendor, laying out metrics by which service is measured and remedies should service levels not be achieved.
It is often a critical part of any technology vendor contract.
The threat of loan cancellation highlights the seriousness of the situation and reflects the bank’s growing impatience with Nigeria’s handling of the project.
Despite the project’s potential to drive agro-industrial growth, the bank noted that weak capacity among the staff managing the initiative has posed a major challenge.
The National Project Coordinating Unit and Participating State Implementing Units were found to lack the expertise needed to efficiently manage financial resources, procurement processes, and environmental and social safeguards.
The report highlights that, as part of efforts to address these shortcomings, the bank has deployed two experienced consultants to support project staff and ensure they meet the bank’s fiduciary requirements.
Due to the weak capacity at the PSIUs and the NPCU, the bank noted that it is providing “handholding support to both National Coordinating Office at the Federal level and PSIUs in terms of financial management, procurement processes, Environmental and Social Safeguards etc; reinforced by regular technical workshops on Bank fiduciary requirements.
“The Bank has also provided additional two experienced consultants to backstop and hand hold the project staff on the implementation of project activities.”
The bank’s evaluation of the project’s performance indicates that it has failed to meet expectations.
While the development objective rating has improved from ‘unsatisfactory’ to ‘satisfactory,’ implementation progress remains below expectations.
The report points to delays in procurement processes, with Kaduna being the only state that has advanced to the Request for Proposals stage for its Design-Build-Operate contract, while Oyo, Imo, and Cross River states are still at the Expression of Interest stage.
The project was initially expected to generate 500,000 jobs and attract $1bn in private sector investments, but no tangible progress has been recorded in these areas.
Also, the report highlights that no significant work has begun on energy provision, administrative buildings, optical fibre installations, or feeder roads, raising concerns about the project’s viability.
In response to the slow progress, the bank has introduced several corrective measures to accelerate implementation.
These include providing technical assistance through the deployment of consultants, fast-tracking procurement processes, engaging with state governments to ensure compliance, and enforcing the submission of quarterly project updates.
The AfDB has also emphasised the need for close monitoring to identify and resolve challenges as they arise.
The SAPZS-I project, conceived as a transformative initiative to enhance Nigeria’s agricultural sector, is now at a critical stage.
The AfDB’s frustration with the slow pace of implementation and disbursement highlights the need for urgent action to ensure the project meets its objectives.
With almost the entire loan amount still undisbursed, key project milestones remain unachieved.
In summary, the bank noted, “Project suffered from effectiveness delays: Although approved on 13-Dec-21, the project became effective on 17-Oct-23, first disbursements to States could only take place as they fulfil other requirements.
“Four States received their first disbursements by June 2024 (8-1/4 months after project effectiveness). The fifth State (Ogun) signed its SLA in October 2024. Procurement of major civil works (DBO contractors and Supervision consultants) has commenced, bidding documents have been cleared for four states of Kaduna, Cross River, Oyo, and Ogun states and Kaduna State has closed its DBO and is ready for evaluation. Activities have commenced and will contribute to the achievement of outputs and outcomes are on track.”
At the inauguration of the SAPZ programme in October 2022, the AfDB’s President, Dr Akinwumi Adesina, said that SAPZ would reduce rural-to-urban migration, expand the fiscal space, and enhance the emergence of competitive agricultural value chains.
He said that the SAPZ would help to transform the rural economies of Nigeria from zones of economic misery to zones of economic prosperity, boosting wealth and livelihoods.
Adesina added that he is delighted that the SAPZ has finally become a reality in Nigeria.
“The AfDB is providing $210m for the development of the SAPZs in Nigeria.
“We are delighted with our partnership with the Islamic Development Bank, which is co-financing with $150m, and with the International Fund for Agricultural Development, which is co-financing with $160m.’’
Adesina said the SAPZ programme in Nigeria is the largest in Africa.
Despite the challenges recorded for the first phase of the programme, The PUNCH recently reported that the African Development Bank Group facilitated the mobilisation of $2.2bn to advance the second phase of Nigeria’s Special Agro-Industrial Processing Zones initiative.
This commitment was made during the Africa Investment Forum in Morocco, where Nigerian state governors, leaders from multilateral development organisations, diplomats, and private sector investors gathered to show their support.
In a statement released by the bank, it noted that Phase I of the SAPZ programme is already benefiting states such as Cross River, Imo, Ogun, Oyo, Kaduna, Kwara, Kano, and the Federal Capital Territory.
Phase II will expand to 24 additional states over the next three years, further linking Nigeria’s agriculture to agro-industrialisation to drive economic growth.
The AfDB President, Dr Akinwumi Adesina, was quoted as saying, “This is a defining moment for Nigeria’s agricultural transformation.
“The Nigeria SAPZ II project will create millions of jobs, empower smallholder farmers, and position Nigeria as a leader in agro-industrialization. These investments exemplify the power of collaboration to achieve sustainable development in Africa.”
