Reduction in MPR still not good for agriculture —Stakeholders
•Canvass 3 per cent interest rate on agriculture loans
The Central Bank of Nigeria (CBN), recently announced a 1 per cent reduction in the Monetary Policy Rate (MPR) from 13.5 to 12.5 per cent, a development which was lauded by many. However, some major stakeholders in the agriculture sector differ on this, sticking by the standpoint that the reduction in the MPR does not in any way portend blooming future for one of the most crucial sectors of the Nigerian economy. NURUDEEN ALIMI reports:
THE news of the reduction in the Monetary Policy Rate (MPR) popularly referred to as lending rate from 13.5 to 12.5 per cent penultimate week by the Central Bank of Nigeria (CBN) came as a cheering one to many stakeholders in the Nigerian economy, but players in the agricultural sector seem not to be on the same page with others, arguing on the premise that the reduction to the best of their understanding does not have a positive effect on agriculture as it still needs to be considered for a downward review.
Speaking with the Nigerian Tribune on how the new MPR would stimulate borrowings for investments in agriculture to help fast-track economic recovery after the damage caused by COVID-19-induced lockdown, some of the stakeholders noted that it is laudable for the CBN to have thought of reducing the lending rate by one per cent, but that it is still not good enough for agricultural investments.
They said that it is just a starting point, but still needs to be reviewed downward for it to really have the desired impact on those who will be getting the loans and the economy in general.
They are of the opinion that agricultural loans should not be given at more than three percent interest rate if the nation is serious with breaking even in the sector, and also compete favourably with their counterpart in other countries.
Some however, lauded the CBN for its various initiatives in the sector, stating that if lower interest rate is combined with other earlier measures such as extended moratorium, lower interest rate on intervention funding and targeted facilities, Anchors Borrowers Programme, among others, agriculture and industrial sector may experience a leap in productivity and stability, and perhaps the sector may contribute more than 21.96 per cent of the Gross Domestic Product (GDP) in subsequent quarters.
Chairman, Agric Group of the Lagos Chamber of Commerce and Industry (LCCI), Africanfarmer Mogaji, stated that it is just one percent and that though it is just the beginning ,it is not appealing enough for long term investment in agriculture.
Mogaji said that it needs to be lower than that preferably, so that it can be appealing to the institutional investors because almost every country now is lowering their gauge to attract foreign investors.
“Well CBN has started, but they can improve on what they have started, the consideration is good and laudable but they can do better,” he said.
In his own view, National President of National Cashew Association of Nigeria (NCAN), Ojo Ajanaku, noted that the 12.5 per cent will not be too good for agriculture, that what farmers and players in the sector really need if they must pay interest in any money given to agriculture is something around 2.5 and 3 percent.
“This 12.5 percent will not be too good for Agriculture. What we really need for agriculture if we must pay interest on any money given to agriculture is that we must be looking at 2.5 to maximum of 3 percent.
“That is what will help grow the agricultural sector, if we are looking at 12.5 percent it is still on a very high side for Agriculture,” he said.
Also, President, National Cotton Association of Nigeria (NACOTAN), Anibe Achimugu, said obviously there are risks in agriculture and government itself has tried as much as possible to ensure that it de-risks agriculture through NIRSAL and even some of its direct schemes, given certain percentage of guarantee.
He said that the COVID-19 pandemic has had very negative effect on the nation’s economy, that the total lockdown for close to two months had negative effect on businesses.
“If some of these businesses do not die completely, they will struggle for a long time to come back and one of the ways of stimulating their return is funding. The funding cannot be for agriculture when we are still talking about single digits interest rate.
“We must reduce our interest rate; the advantage we have as a nation is that we have in-country demand capacity, in other words we have the market; 200 million people that is the market.
“I always say it, I don’t know how we will do it, what magic we will do, what political will we need, and we must reduce our interest rate. Government has done tremendously well with the political will of this administration and the ownership that CBN has taken to ensure that this major sector of the economy is boosted. If we cannot draw agricultural loans for 2 to 3 percent we will still not achieve the significant impact we want to achieve instantly.
Adding, “What I am telling you is that if it is possible to do zero percent we should be thinking in that line, especially under the Covid-19 circumstance.
Achimugu noted that if for instance 10 agricultural commodities are supported very well and at the end of the day four of those commodities got it rightly, the loss recorded from the six other commodities that are not sincere or something happen and they did not give the expected result will not show; as the huge success recorded by the four will cover the six that did not do well.
Using cotton as an example, Achimugu stated that if the value chain of cotton is impacted positively, it will swallow four other crops.
“The impact it would have on our socio-economy level will be huge and also contribution to the GDP, job creation, wealth creation, among others will be visibly seen.
“If you engage people on cotton farm, the CBN has tried , as of today we are talking about 250,000 cotton farmers, multiply this by four because it is minimum of four people per household, so a farmer multiply by the four people he is taking care of , you can imagine that.
“You can talk about gunner, textiles, the garment then you talk about the extension services, logistics. If you put all these together you are talking about millions of Nigerians who will be engaged. To me they have tried, they can try a little bit more.
“The five years of this administration of President Muhammadu Buhari particularly with this ABP, honestly we cannot but praise him in that light. Also the way and manner the CBN Governor, Godwin Emefiele has taken the instructions of the President to push agriculture under the ABP, I think if you look at the data book, you will see the impact of it. It is commendable.
“Agriculture is patience, you have to put the seed, you have to nurture it and you have to wait for the harvest time, but a lot of people want it to happen immediately, it would not happen that way. I always say that the ABP is one of the best agricultural programmes ever introduced in Nigeria. It affects so many things positively in Nigeria,” he added.
National President of the Poultry Association of Nigeria (PAN), Ezekiel Ibrahim, in his own view said that there are several special funds allocated for agriculture and manufacturing but the most important thing is how the fund is disbursed especially in agriculture.
He suggested that real farmers and stakeholders in the agric sector should be carried along, and that one of the major challenges farmers are facing is that the funds do not get to the right farmers at the right time.
“Our challenge all these years from the Operation Feed the Nation in 1978, during Obasanjo military era to green revolution during Shagari, the major challenge is that funds do not get to the right farmers at the right time.
“If you are not given funds when you need it and the money came later when planting has gone, what will you use the money for because the time you need the money you don’t get it.
He further said that the recovery rate of some of the funds is poor because the right stakeholders are not carried along and the funds are not released when needed.
“Why we are having problem is because they did not involve the commodity associations. For instance, in my area which is poultry, I am supposed to know all the poultry farmers, the big and the small. It is not about the percentage it is the utilisation that matters.
“They have tried they have given moratorium to people, they have reduced interest rate, but has it gone to the right people, some people will get this money and go and build houses, because we are not taking the right step,” he added.
Recall that the contribution of Nigeria’s agricultural sector to the Gross Domestic Product (GDP) in the first quarter of 2020 was the sector’s highest first quarter contribution in the last two years, according to data released by the National Bureau of Statistics (NBS).
Figures released showed that the sector in the first quarter of 2020 contributed 21.96 per cent to the nation’s GDP, which is the monetary value of all finished goods and services made in the country.
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