The signing of a Memorandum of Understanding between the Kwara State Government and Vasolar Consortium, a Spanish firm, for a N70bn (€280m) rice deal has become a subject of controversy.

Kwara says the project is a worthwhile one, which will not only create jobs for about 12,000 people, but will significantly reduce the country's importation of rice, as well as boost the economy of the state.

However, the chairman of the major opposition party in the state, the Action Congress of Nigeria, Mr. Kayode Olawepo, accused the state government of engaging in a venture that would not be beneficial to the people of Kwara.

The Spanish conglomerate is expected to invest N70bn within four years and provide the technical expertise, while the state government is to provide 20,000 hectares of land (5,000 hectares annually) for the four years.

Also, the state government is expected to contribute about €7m within four years as a mark of security and to further exhibit seriousness and commitment to the project, which is under public-private partnership.

According to the governor, Abdulfatah Ahmed, the conglomerate will own 70 per cent equity share, while the state government holds 30 per cent.

Present at the signing of the MoU at the Government House, Ilorin, were officials of the Vasolar Consortium, led by the Managing Director, Mr. Rueben Parejo. The Managing Director, Guaranty Trust Bank, Mr. Segun Agbaje was also present, while Ahmed, his deputy, Mr. Peter Kirisa, members of the state Executive Council, Speaker of the House of Assembly, Mr. Rasaq Atunwa, and frontline monarchs, which included the Emir of Ilorin, Dr. Ibrahim Zulu-Gambari, were the hosts.

Parejo said the company would remain committed to the terms of the MoU, adding that Nigeria was blessed with good climate, arable land and human resources to transform agriculture.

He stated that Nigeria's reliance on oil as a major source of foreign exchange earnings should be improved upon with the diversification of the economy.

According to him, agriculture is a potent sector that is capable of transforming the economy. He advised that it is not good for any country to depend on the importation for its food needs, adding that Nigeria needed to adopt an improved and modern agricultural system.

"Modern agriculture is not all about money but to create good infrastructure. We need the FG to collaborate with the state government. We need the Federal Government to develop agricultural infrastructure in Nigeria. Banks should also support agricultural projects. We are committed to implementing vigorously and according to international best practices, our own part of the MoU," Parejo said.

Agbaje said the development of agriculture would greatly transform the economy. He pledged the commitment of the bank to assist the state in the implementation of the project.

He said, "Agriculture probably is the only way forward for a country like Nigeria. It is a big step for employment. It is a big step for self food production and import substitution. On our own part as a bank, we will do all we can to assist this great state in the performance of this great initiative."

The opposition, through Olawepo, however, alleged that Vasolar was not an existing company. To buttress his stand, he alleged that the consortium was not listed or registered with the Spanish equivalent of Nigeria's own Corporate Affairs Commission. He kicked against the government's investment of €7m and 20,000 hectares of land on the project.

He alleged that the project was a conjecture or contraption to divert public funds into personal concern. According to him, the residents of the state should not allow the alleged arrangement to stand.

Olawepo said, "In line with our commitment to ensure that it is no longer business as usual in Kwara, we are again raising the alarm over what is clearly another attempt to commit public fund and property to a questionable project.

"We deem the whole arrangement a monumental fraud. For one, our research since the event reveals that no company exists under the name Vasolar Consortium, whether in Spain or anywhere in the world. Assuming without conceding that such a company exists in Spain, how come it is not listed or registered with the Spanish's equivalent of our own Corporate Affairs Commission? Does that not raise the question of credibility which is a sine qua non in any business deal?

"Again, since the whole project is tagged a N70bn venture and the ‘Vasolar Consortium' is to provide this fund over a period of four years, why must Kwara commit another €7m of taxpayers' fund to the same venture it is certain to convert to a private venture? If, as it is clear from the above, that Vasolar Consortium is a nonexistent company, why give out 20,000 hectares of fertile land belonging to our people?

"This ‘fraud' must not stand. We urge the people of Kwara State to resist by all means legal this fraudulent arrangement under the guise of commercial farming. Enough is enough."

But the Senior Special Assistant to the state Governor on Media and Communications, Dr. Muyideen Akorede, said  the N70bn rice venture was the product of extensive negotiations, due diligence and had the Corporate Affairs Commission's approval.

Akorede said Ahmed received a letter of intent from the Spanish investors in October 2011, seeking to partner with the state government to set up a rice cultivation, processing and packaging project in the state following a recommendation by the Spanish Embassy in Nigeria.

According to him, considering that the company is said to be undertaking similar ventures in other parts of Africa under Project Africa Rice and in line with the government's policy of encouraging foreign direct investment, Kwara officials were subsequently dispatched to Spain to open discussions with the company.

He added that the delegation was directed to conduct vigorous checks on Vasolar's legal status as well as assess its capacity to invest the needed funds in the project.

He stated that the checks included original copies of Vasolar's certificate of incorporation, the articles and memorandum of association, which were sighted and duly notarised copies obtained for the state government's record.

Akorede stated that the proposed Joint Venture Company, Vasolar-Kwara Company Ltd, had been approved and reserved by the CAC. He said this could only have been achieved based on the presentation of all relevant documents concerning Vasolar Consultoria 2006 SL to the CAC.

He said that under the terms of the MoU, the government's €7m investment, which is 10 per cent of Vasolar's annual investment, had been held in an escrow account as a show of its commitment to the project and which can either be withdrawn or reinvested in the project at the end of the four-year deal.

He emphasised that the rice project would generate 12,000 jobs over the value chain, stimulate economic development of the state as well as ensure the development of agriculture in the state through transfer of technology and training of farmers.

He said the scale of the project and the value of Vasolar's investment indicated its confidence in Kwara State's growing reputation as a prime investment destination.

In spite of the criticisms of the project by the ACN, Ahmed said the project would drastically reduce the rice importation bill of Nigeria as the country spends about $2.6bn annually on rice importation. He said the importation trend must not be allowed to continue more so, when the country has fertile land for rice and other crops' production. He urged the FG to assist the state to improve its irrigation system to boost agriculture and ensure national food security.

Ahmed said, "Nigeria is a new haven for investment in Africa. We want to improve agriculture from subsistence level to commercial scale. Apart from wealth and job creation, it will also support our youths. There is a ready market. We are partnering with the company as they have the expertise and we have the market."

Meanwhile, a faction of the Alliance for Democracy in the state has cautioned Ahmed against relying on foreign investors and experts in an effort to commercialise agriculture and develop the state.

In a statement by its chairman, Mr. Biliaminu Aliu, and secretary, Mr. Michael Ologunde, the party said the state in particular and the country at large had enough and competent agricultural experts, who could aid the commercialisation of agriculture in the state.

Aliu urged Ahmed to consult the indigenous agriculturists and agro-economists in the state and stop co-opting American farmers if he was serious about improving agriculture and modernising farming in the state.

"By the way, what is wrong with the South African farmers in Shonga Farms? Why is the governor running to American farmers if they are useful?"

Analysts, however, believe that the much talked about modernisation of agriculture in Kwara would only be meaningful if the plans are translated into reality and not mere rhetoric.