THE Federal Government (FG) recently banned farm gate procurement of agriculture products by foreigners or their agents.
According the FG, this would eliminate unfair pricing and promote the channeling of farm produce exports through licensed aggregators. It is meant to boost non-oil tax revenue and channel foreign exchange (FX) proceeds through the official window.
At Nigeria’s present level of agriculture, there are fears in some quarters that the country cannot feed its population, let alone export. The World Bank had linked underperformance of the country’s agriculture to factors such as poor seedling, high cost of fertilisers, insufficient mechanisation, weak transport infrastructure, inefficiencies at ports, and low access to credit facilities.
Interestingly, many of these highlighted challenges are the primary responsibilities of federal ministries such as the Ministry of Agriculture, Ministry of Industry, Trade & Investment, and Ministry of Transportation to mention but a few.
Some analysts have posed the question: “Should the central bank which roles also encompasses developmental, sit and watch the economy sink into oblivion?” A popular Igbo proverb says that “an elder does not sit at home and watch a tethered goat deliver.” In other words, one cannot watch a situation get out of hand before salvaging it.
Therefore, due to the failure of these ministries to rise to the occasion, the CBN in pursuit of its expanded mandate, as well as developmental finance function provided for in Section 31 of the CBN Act (2007), has over the years intervened in critical sectors to safeguard the Nigerian economy. These interventions are not peculiar to Nigeria as most critics would portray it to be.
Available records show that the CBN has introduced no less than 38 intervention programmes, agriculture being one of them, including the recent 100 for 100 Policy on Production and Productivity (PPP). The purpose is to increase local production and boost the economy of the country where a lot of government owned institutions are crippled by corruption and mismanagement.
Thus, the bank has about 38 purpose-driven interventions that are functionally based, well-thought-out and born out of the critical issues within the economic space.
Professor Ken Ife, Development Consultant and Lead Consultant, Industry and Private Sector Development, ECOWAS Commission, said the interventions by the Central Bank of Nigeria (CBN) in the economy, which were put at N3 trillion, are timely and with consequent positive results.
He said programmes like the Anchor Borrowers Programme (ABP), Targeted Credit Facility (TCF), Real Sector Support Facility (RSSF), Healthcare/Pharmaceuticals Facility, Electricity Stabilisation Facility, 100 for 100 PPP and RT 200 Forex programmes all have significant impacts in the lives of Nigerians and Nigeria as a whole. In an effort to stimulate the flow of credit to the real sector of the economy and reverse the nation’s over-reliance on imports, the Central Bank of Nigeria introduced the 100 for 100 Policy on Production and Productivity (PPP).
The apex bank under this, received 224 applications, valued at N294.91 billion for real sector projects in agriculture, energy, healthcare, manufacturing and services in the first tranche.
Ife also added that Nigeria’s economy jumped out from recession in just one quarter (December 2020) and this was only possible because of the quantitative monetary and fiscal policies responses, including of course, a higher order of targeting of CBN’s domestic finance intervention at the real sector of the economy.
The recent celebration of the fifth anniversary of the Anchor Borrowers’ Programme (ABP) in Kebbi by the Federal Government spearheaded by the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele was an evidence that the interventions are yielding result. President Muhammadu Buhari must have gushed with joy by reason of the event witnessed by many governors and members of the international community.
Launched in November 2015 by President Buhari, the ABP was conceived as a low-interest loan scheme which gives ample flexibility for re-payment. To make the loan farmer-friendly, interest was reduced to as low as nine per cent.
However, with the advent of the Covid-19 pandemic, the interest was adjusted to five per cent. The loans are disbursed through any of the Deposit Money Banks (DMBs), Development Finance Institutions (DFIs) and Microfinance Banks (MFBs), all of which the programme recognises as Participating Financial Institutions (PFIs).
The ABP was to provide farm inputs in kind and cash to small-holder farmers (SHFs) to boost agricultural production. The essence of the small-holder farmers-focus was to deepen and widen the scope of agricultural production as well as maximize the output within the value chain.
Categories of farmers captured under this programme include those cultivating cereals, cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock. Just as rice farmers have benefited from the programme, other crop farmers are also beneficiaries including those involved in processing of the crops for food, raw materials and for other uses.
For the record
Available records from the CBN show that in five years, about 3.8 million farmers, cutting across over 20 farm produce, have so far benefited from the programme. Mr. Yila Yusuf, Director, Development Finance Department of CBN recently said, “The multiplier effect on the economy is huge. The ABP has helped farmers improve their yields. For maize we now do five metric tonnes per hectare and for rice we are improving from four metric tonnes to 10 metric tonnes per hectare. We will be trying out some Brazilian seeds that we will give to the anchors and their association.”
Analysts have continued to pour encomiums on the CBN and its governor for envisioning and sustaining the ABP. This, they argue, has saved the nation from unforeseen embarrassment and hunger during the lockdowns occasioned by the Covid-19 pandemic last year.
Prior to the commencement of the programme, Nigeria was a heavy importer of food items including those that could easily be grown in the country. Nigeria was leading other African countries in the importation of rice from Thailand. Wheat, cotton and other sundry items make up the import-list, costing the nation millions of dollars in forex. This led to a depletion of the foreign reserve. Matters were made worse by the crash in global price of crude oil.
This informed the opinion of those who see Emefiele as the man who saw tomorrow with all its dangers and headwinds and moved quickly to steer the nation out of harm’s way.
As a way of encouraging more farmers to enlist in the ABP, CBN says it no longer accepts cash from them as repayment for their loans, instead, the apex bank rates every single commodity they produce and guarantees the price. This has helped to build farmer’s confidence in the programme as well as win their trust with the ultimate goal being to encourage more farmers to enroll in the programme.
This step also discourages hoarding of the products, a development whose negative effect was already destabilising the prices of commodities.
Emefiele, while speaking at the event, disclosed that the CBN had financed 2,923,937 small holder farmers cultivating 3,647,643 hectares of land across 21 commodities through about 33 participating financial institutions in the country. This has created millions of jobs through the various strata of the value chain.
Emefiele projects that farming would become a profitable venture in Nigeria as all farmers, because of the guaranteed off-take of their produce, are smiling to the banks and repaying their loans.
He said, “Under the 2020 wet season CBN and Rice Farmers Association of Nigeria (RIFAN) partnership, we financed 221,450 farmers for the cultivation of 221,450 hectares in 32 states of the country. Repayment of loan is crucial to the sustainability of the programme.”
As a further proof of expansion of the programme, the CBN has commenced sale of 200,000 metric tonnes of paddy rice to 18 Nigerian millers. The strategic intervention of CBN means that farmers no longer suffer wastages of their produce as the nutty issue of off-takers had been addressed.
The National President of RIFAN, Alhaji Aminu Goronyo, commended President Buhari and the CBN, stressing that the ABP demonstrates in practical terms the government’s commitment to food security and genuine economic diversification.
As some Nigerian farmers get set for the new planting season, Professor Ken Ife said a total of N948 billion has been disbursed to farmers as loans through the ABP of the CBN in-conjunction with the commercial banks, as at the second week of February, 2022.
He explained that during the period under consideration, 4,478,381 farmers benefited from the programme loans, with 5.2 million hectares of land, which has created 12.5 million direct and indirect jobs.
In a telephone chat with Nigerian Tribune, Professor Ife, pointed out that more people could have died from starvation and hunger in Nigeria than victims of COVID-19 and insecurity put together if decisive action was not taken to tackle food security through CBN’s Anchor Borrowers Programme.
The don added that the unemployment challenge, which he described as a demographic time-bomb, should leave no one in doubt of the consequences of under 35 year young people, who make up 65 per cent of Nigeria’s population, with unemployment rate of 48 per cent and underemployment rate of 22 per cent, and only seven per cent of graduates finding employment.
Recommendations
A herd of economists however recommended that commercial and development banks should ideally have a business advisory desk in each branch that should be the first port of call of prospective businesses seeking loan from the Central Bank of Nigeria’s 100 for 100 Policy on Production and Productivity (PPP).
According to Professor Ife, a pool of business advisers would improve the quality of business plans, reduce the rejection rate of applicants and increase the take-up of the loan facilities.
and then