GES: Issues, controversies, way forward

The Growth Enhancement Support (GES) scheme has been the major driver of the agricultural sector since its introduction in 2012 by the past administration.

This scheme has suffered many challenges ranging from payment of agro dealers, corruption and inability to capture real farmers.

When the present administration assumed office, it promised to sanitise the scheme and continue with it because it has been the best alternative to reach out to rural farmers and increase productivity in the sector.

In the 2014 GES scheme, the agro dealers were being owed about N61 billion outstanding payment, which the present administration promised to pay, and currently have paid about 35 per cent of the debt.

The 35 per cent payment according to the agro dealers was used to settle some debts of the suppliers which by implication left the agro dealers with nothing to go back to and buy inputs for the 2016 GES which will kick off soon.

Another issue is the interest that is currently accumulating in banks which the agro dealers and suppliers needs to clear before banks will agree to release loans for them to commence the 2016 GES.

In as much as the government has declared its readiness to kick start the 2016 GES which is already late, various players in the GES still pointed to the outstanding payment as a major factor that will hinder the progress of the GES.

In a meeting with major players in the GES, the Executive Director of the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Arowosafe Jide, said that NIRSAL deals with actors across to drive and facilitate agricultural operation in Nigeria.

Speaking on the late commencement of GES this year, Jide said “Looking at the way NIRSAL is structured, to operate that way, we need to fix agricultural value chains in Nigeria. And if we have late start of the programme like this, it becomes a major issue that bothers on productivity and production, so that needs to be well taken care of from the ministry.

It will be recalled that the former Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, said that if seeds are given to farmers after farming season, the farmers without storage facilities will end up eating the seeds.

Concerning the outstanding payment to agro dealers, the NIRSAL boss said the way NIRSAL operates is very simple.

“We facilitate finance, and if we have outstanding on previous transaction, then it becomes a major problem for our counter-parties and all other actors to play in the one that is being proposed for 2016.

“So we want the ministry to look at it thoroughly well in a way, give a strong level of comfort and as well try to clean up whatsoever we have for 2014 transaction.

“NIRSAL also backed the GES operation with a risk guarantee and if we have outstanding payment for 2014 even up till now, it will be hard for NIRSAL as a private sector player to convince its board to participate in the 2016 arrangement.”

Jide further said that there is need to take the discussion further with the Ministry of Agriculture so that an agreement will be reached and a good platform will be put in place for the 2016 GES to ride on.

He also explained that “Most of the counter-parties that have been involved in this transaction are into debts, the banks and agro dealers. And if we did 2014 and we are waking up to do 2016, there is still a disjoint that must be settled.

“I believe strongly that between the Ministry of Agriculture, NIRSAL and the counter-parties, we need to set up a technical team that will look into the operational dynamics for 2016 and as well look back to what happened in 2014 and we can fix it and know how we can take every other things forward.”

He also noted that there was a strong Memorandum of Understanding (MoU) signed with the ministry and other players for NIRSAL to facilitate the financing of that particular operation but most of the understanding was breached by various actors.

Speaking on n the breaches, Jide said “one of the breach that we had under the 2014 GES was that before the start of the 2014 GES, the Federal Ministry of Agriculture was supposed to escrow funds in the Central Bank of Nigeria (CBN), that never happened and that was actually the bane of the entire disruption we had under the 2014 GES.

“The ministry intervention funds on the GES were supposed to be escrowed in the CBN so that we don’t have issues with the agro dealers and banks but that was never done, and good enough, NIRSAL put down its words and still went into this and it got our fingers burnt.

“Another issue was the outstanding payment to the agro dealers that was strongly delayed and it caused a distortion in the financials that was prepared between the banks and the agro dealers and that made interest to continue to grow and it got to the level that NIRSAL had to talk to banks to stop the interest charges,” he added.

On the 2016 GES, he said that a new MoU needs to be signed so that it can properly fix what happened in 2014 for it not to reoccur in the proposed 2016 GES operation.

He also said that NIRSAL will meet with the Ministry of Agriculture to agree on the better understanding for the 2016 arrangement and also discuss about the dynamics of payment that was released by various parties.

On the part of agro dealers, the National President of Growth Enhancement Scheme Agrodealers Association of Nigeria (GESAAN), Kabiru Fara said that the agro dealers were ready for the 2016 GES.

He also pointed out the issue of outstanding payments and interest rate in bank lending as their major challenges.

According to him “before we take the products to the centres, there are ingredients needed, in the past, NIRSAL takes care of some risk because as an agro dealer, I need finances and these finance houses, their interest rates is something you cannot do directly at 18 per cent or 19 per cent interest rates, it is on the high side.

“The previous arrangement is that NIRSAL and the CBN fix it at 18 per cent and NIRSAL takes care of 50 per cent and you will now only pay nine per cent, it is very reasonable for us to do business.

Explaining further on the GES, Fara said “sometimes, we don’t go to the financial houses, we go to the suppliers ones there is allocation by the Federal Ministry of Agriculture that a particular Centre belongs to a particular agro dealer.

“Some of the suppliers will collect farmers’ money and two of you will wait for the balance payment for the Federal Government, in some cases, you are even paid including your province, the supplier bears the burden waiting for the Federal Government to pay to them or domicile the balance payment to the supplier.

“Some of the suppliers will also know they need the understanding of the financial institutions because the whole system is interwoven and we are all together.

“We are ready as agro dealers to go the centres and subsequently the GES that will come in the dry season, we are really happy that some of money have been paid to us, but we urge the ministry, even now the finance houses and the suppliers are not willing to give us products.

“If we have our money, we will go and buy inputs and take it to the centres, but unfortunately the money given to us is in the average, it’s 35 per cent, there are lot of weights waiting for that money for two years now.

“So as the money comes, a lot of issues have been resolved, we don’t have enough money to go to the suppliers and say we have money, give us products to the centres, very few of us are comfortable to take any amount of products to the centres.”

The banks in their individual opinions said there was need to settle the outstanding payments before the 2016 GES will commence.

They said if not for the 35 per cent that was paid to agro dealers, most of the loans would have been provisioned which will have a negative implication on the agro dealers.

They banks also said that the payments were marred with some dynamics they didn’t understand, because some payments that was supposed to be paid to some particular banks were paid to suppliers who don’t have any business with it.

They said that the payment was meant to be paid to the agro dealers who have direct dealings with the banks, but if the agro dealers have any side deal with the suppliers, it should not affect the existing framework.

They lamented that some bank staff have been under suspension, while some staff credit approval have been withdrawn due to the outstanding payment from the GES.

Responding, the Permanent Secretary of Ministry of Agriculture, Dr Shehu Ahmed, said the government have pledged to pay up the outstanding payment to agro dealers.

He also said that the government have already made available the fund for the 2016 GES which will kick start soon.

“On the issue of debt, you know government is a continuum, we inherited this debt when we came in, we are very concerned about that. The government have provided money for the 2016 GES, we will kick start soon.

“We have been assured that government will pay the debts but it will be in phase by phase, we have started with the first phase and we are going to commence the second phase.”