Nigeria Economy : Evaluating Emefiele’s Positive effect on Agricultural framework

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By NIYI JACOBS

Sustained public sector interventions in agriculture are critical to the growth and transformation of the sector in Nigeria. This is due to the low level of investment in the sector compared to its huge potentials to create employment, generate wealth and reduce poverty.

The agricultural sector in Nigeria is endowed with fertile soil, complimented by streams, lakes, forests, lush grassland, as well as huge demand driven by a large active population, estimated at 182 million as at 2016 (representing 2.35 per cent of global population).

An agency of the government, the Central Bank of Nigeria (CBN), has been actively involved in intervening within the agricultural sector with the aim of improving access to finance (mostly at single digit rates) to agriculturalists. The impact of these interventions within the agricultural sector by the Bank has not been captured within an economy-wide framework of general equilibrium modelling in the past, hence obscuring the impact of its sectoral contribution to growth in the economy.

The apex bank in line with its developmental function had established the Anchor Borrowers’ Program (ABP). The Program which was launched by President Muhammadu Buhari (GCFR) on November 17, 2015 in order to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.

The program thrust of the ABP is provision of farm inputs in kind and cash (for farm labor) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro-processors and address the country’s negative balance of payments on food. At harvest, the SHF supplies his/her produce to the Agro-processor (Anchor) who pays the cash equivalent to the farmer’s account.

Meanwhile, the Central Bank of Nigeria, (CBN) has enjoined Nigerians, particularly women and youths, to cue into its bouquet of intervention programmes and take advantage of schemes such as the Anchor Borrowers’ Programme , even as 3,107,949 small holder farmers have so far benefited from the Anchor Borrowers’ Programme as at April 2021.

Speaking during the CBN Special Day at the ongoing 42nd Kaduna International Trade Fair with the theme: “Promoting Domestic Production to Mitigate the Current Economic Challenges”, the Acting Director, Corporate Communications of CBN, Mr Osita Nwanisobi said the Anchor Borrowers Programme was able to provide intervention facilities to 3,107,949 small holder farmers who cultivated 3.8 million hectares of land.

To also ensure a sustainable economy post pandemic, the Central Bank of Nigeria (CBN), in response to the severe effect of the COVID-19 pandemic on the economy, particularly in agriculture, introduced the CBN/NIRSAL Agri-Business/MSME Investment Scheme (AGSMEIS).

The AGSMEIS provides funds up to Ten Million Naira (N10,000,000) at 9% per annum for up to 7 years to eligible start-ups and existing businesses and entrepreneurs. 10 The facility is intended to provide liquidity for businesses including agri-businesses and to slowly steer the economy to normalization.

Furthermore, Abubakar Kure, the Managing Director of the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance bank, on behalf of the CBN, noted that the disbursement of the N50 billion Targeted Credit Facility (TCF) to the beneficiaries has commenced. 13 The CBN Governor, Godwin Emefiele also noted that the only way for the country’s economy to bounce back is to ensure aggressive investments in manufacturing and agribusiness sectors, post COVID-19.

The Central Bank of Nigeria, (CBN) has therefore enjoined Nigerians, particularly women and youths, to cue into its bouquet of intervention programmes and take advantage of schemes such as the Anchor Borrowers’ Programme ,even as 3,107,949 small holder farmers have so far benefited from the Anchor Borrowers’ Programme as at April 2021.

Speaking during the CBN Special Day at the ongoing 42nd Kaduna International Trade Fair with the theme: “Promoting Domestic Production to Mitigate the Current Economic Challenges”, the Acting Director, Corporate Communications of CBN, Mr Osita Nwanisobi said the Anchor Borrowers Programme was able to provide intervention facilities to 3,107,949 small holder farmers who cultivated 3.8 million hectares of land.

The Apex bank also strengthened the Loan to Deposit ratio (LDR) policy, which has resulted in a significant rise in loans provided by financial institutions to banking customers. Loans given to the private sector have risen by over 21 per cent over the past year.

There is also the creation of a N100bn credit facility for affected households and small and medium enterprises through the NIRSAL Microfinance Bank; the creation of an N100 billion intervention fund in loans to pharmaceutical companies and healthcare practitioners intending to expand and strengthen the capacity of our healthcare institutions as well as the N1 trillion facility in loans to boost local manufacturing and production across critical sectors.

How agric intervention contributed to GDP growth

In order to develop other sources of revenue as well as to protect the economy from perennial shocks occasioned by the drop in crude oil prices, the federal government has been paying more attention to the agricultural sector.

Indeed, that has prompted the Central Bank of Nigeria (CBN), through its Anchor Borrowers’ Programme (ABP), under its development finance function to continue to seek ways to support operators in the agricultural sector in order to create job opportunities and help preserve foreign exchange (forex) revenues.

The pilot phase of the ABP with rice cultivation that commenced in Kebbi State had proven to be a success, which was extended to other states.

The ABP programme was designed and introduced by the Governor, Central Bank of Nigeria, Mr Godwin Emefiele, to assist small scale farmers to increase the production and supply of feedstock to agro-processors.

The programme is aimed at creating an ecosystem to link out-growers (small holder farmers) to local processors, increase banks’ financing to the agricultural sector, enhance capacity utilization of agricultural firms involved in the production of identified commodities and as well as the productivity and incomes of farmers.

The anchor borrowers’ programme is also a platform to build the capacity of banks in agricultural lending to farmers and entrepreneurs in the value chain, reducing commodity importation. It is also expected to reduce the level of poverty among small holder farmers and create jobs while assisting rural small-holder farmers to grow from subsistence to commercial production levels.

Disbursements of over N260 billion to 1.28 million farmers under the Anchor Borrowers Scheme in 2020 to support the cultivation of key staple items by farmers.

Analysts have argued that sustained public sector interventions in agriculture are critical to the growth and transformation of the sector in Nigeria. This is due to the low level of investment in the sector compared to its huge potentials to create employment, generate wealth and reduce poverty