Anchor Borrowers’ still troubled
Fears mount over possible collapse CBN struggling to recover loans
NIGERIA, ACCORDING TO STATISTICS provided by the Food and Agriculture Organisation (FAO), possesses an estimated 3.7 million hectares of arable land, the 9th largest in the world and largest in sub-Saharan...
NIGERIA, AC CORDING TO STATISTICS provided by the Food and Agriculture Organisation (FAO), possesses an estimated 3.7 million hectares of arable land, the 9th largest in the world and largest in sub-Saharan Africa. However, agriculture analysts have disclosed that only 33 per cent of the supposed productive land is actively utilised for cultivation while over 60 per cent is redundant or exploited for non-agricultural purposes
In a drive to boost the country’s agricultural outputs, various government administrations have implemented programmes with many achieving little success and many others being swept under the rug at the cessation of each administration.
The present Muhammadu Buhari-led administration, has since inception, registered its desire to steer the country towards economic diversification through a clamp on importation, promotion of food security, sustainability and increased exportation.
The government has over time introduced agricultural programmes including: The Food Security Council, Presidential Economic Diversification Initiative (PEDI), Presidential Fertilizer Initiative (PFI), Youth Farm Lab. But the most prominent, dominant and money guzzling agriculture programme initiated by the federal government so far is the Anchor Borrowers’ Scheme (ABP).
The ABP was inaugurated by President Muhammadu Buhari on November 17, 2015, barely six months into his first tenure. The scheme, according to him, was established to create economic linkage between anchor companies involved in the processing of agriculture produce and small holder farmers of the required agricultural commodities.
The programme, facilitated/coordinated by the Central Bank of Nigeria also aimed at increasing banks financing to the agricultural sector and enhancing capacity utilisation of farmlands involved in the production of notable commodities.
The policy documents of the programme also indicated that the ABP will boost agricultural lending to farmers and entrepreneurs, strengthen the value chain, reduce commodity importation, alleviate poverty among small holder farmers, increase employment rate and also, develop smallholder farmers to grow from subsistence production levels to commercial productivity.
Upon flagoff, the programme got its grant from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) under the auspices of the CBN. Beneficiaries were provided loans at nine per cent interest rate, expected to be repaid based on the gestation period of their commodities which will be mandatorily delivered at designated collection centres. According to the guidelines of the programme, upon harvest, benefiting farmers are expected to repay their loans with harvested produce (which must cover the loan principal and interest) to an ‘anchor’ who pays the cash equivalent to the farmer’s account.
Godwin Emefiele, the CBN governor, in his commendation of the scheme, noted that beneficiaries under the umbrella of the Rice Farmers Association of Nigeria (RIFAN) had increased over the years, from an initial 75,000 beneficiaries in 26 states to about 275,000 beneficiaries. He added that the programme had also expanded to accumulate more commodities such as cassava, maize, soybean, and ginger, among others.
Despite the ABP’s remarkable objective and while it has been lauded in several quarters as one of the most successful CBN development finance interventions, the programme has been marred by a series of controversies, questioning the sustainability of its framework, leading to fears of an imminent collapse and incurred losses for the CBN. Agronomists and agriculture analysts have also raised concerns regarding the scheme’s continuity as the objectives of the scheme appear threatened by failure of the beneficiaries to repay loans running into billions of naira as agreed amid accusations of corrupt practices in disbursing the loans with several farm association leaders, officials and politicians allegedly siphoning some of the funds for personal use.
In March 2020, the House of Representatives resolved to investigate the ABP over non-recovery of N81.5 billion from some companies involved in the scheme.
According to Sergius Ogun, representing Esan North East/Esan South East, out of the N104.2 billion provided by the apex bank for the scheme, a total of N86.6 billion was disbursed to the anchor companies and the sum of N81.5 billion yet to be recovered from the defaulting companies.
“With the non-recovery of the outstanding N81.5 billion, other potential small holder farmers who will have been beneficiaries of the scheme are being denied the opportunity to benefit from the scheme,” he noted.
This, the lawmaker said was having a negative impact on the overall objective of the scheme.
Femi Gbajiamila, the Speaker of the House of Representatives charged the Committees on Agricultural Production and Services, Banking and Currency to investigate the issue and report back within four weeks for further legislative action. However, the emergence of the covid-19 pandemic disrupted proceedings as the House was forced to close its sessions during the resultant nationwide lockdown. The required report has not been presented till date.
Many of the farmers associations have also been accused of corrupt practices in disbursing the loans with several of their leaders allegedly siphoning some of the funds for personal use. As it stands, an estimated 40 per cent of the purported beneficiaries have allegedly failed or refused to fully repay.
Farmers explain reasons for delayed repayment
Speaking on why many farmers have failed to repay the loans as expected, Isa Wanzam, a rice farmer and loan beneficiary in Kebbi State said when the funds were being disbursed to many of them (the farmers), it wasn’t stated clearly to them that it was a loan. He added that they didn’t apply for the loan in the first place and it will be a difficult task for many of the farmers to repay the loan as not all of it was in monetary form as some farmers were offered farm implements which they considered as gifts or farming support aids from the government.
“We wouldn’t have collected anything had they thoroughly sensitised us about the programme,” he stated.
Commenting on this, Samaila Dabai, deputy governor, Kebbi State said the delay in the repayment of the loans can be blamed on many factors, one of which is the devastating flood experienced last year which affected a lot of farmlands. He argued that the affected farmers need to be given more time to enable them recoup during their next harvests.
Umar Al-Hassan, another rice farmer disclosed that the loan was disbursed indiscriminately as the cash was given to those who aren’t farmers or understand what farming entails while the farmers were made to bear the brunt.
Bello Abubakar-Annur, president of Maize Association of Nigeria (MAAN) explained that about N5.4 billion was advanced to members of the association but unfortunately, repayment of the loans was hindered by the covid-19 pandemic and unfavourable weather factors which affected maize production, leading to poor productivity and failure to off-take logistics and adhere to repayment plans.
Kabir Ibrahim, national president, All Farmers Association of Nigeria (AFAN), bemoaned that the credit from the CBN, disbursed through commercial banks and other windows were not readily available to the real farmers in many cases but hijacked by some officials who claim to be representatives of the farmers. He added that the banks did not take inhibitors of production such as storage, post-harvest losses, transport risks and others into cognisance in the agricultural lending system.
Towards a more stabilised farmers’ support scheme
As the Anchor Borrowers’ Programme remain perturbed over payback defaults which had adversely affected the smooth operation and expansion of the scheme, agricultural experts have called for a better structured policy implementation that would ensure the programme achieves desired results.
Kabir Ibrahim suggested that practising farmers should be properly sensitised about the programmes and directly involved in the loan disbursement processes. The AFAN president also noted that before initiating the scheme to a group of farmers, the CBN needs to be aware of the production value and risks associated with the particular agricultural commodity.
Abiodun Olaniyi, executive director, Agriquest Africa, an agribusiness management organisation, said that many of the agricultural inputs provided to the farmers by the scheme are crude implements which may likely prove inefficient in the long run.
He explained that many of the farmers yielded little due to lack of mechanised tools to bolster production, which also resulted in little yields, making it more difficult for the farmers to meet up with loan demands.
Olaniyi suggested that the money used in purchasing some ‘out-of-date’ farm inputs can be better utilised in purchasing improved seedlings, mechanised tools and technology-based implements which will be presented to the farming associations and communities to foster improved productivity.
He added that aside providing these tools, their utilisation should also be properly monitored to ensure they are used for the right purposes.
Agriculture experts have also opined that the programme should be put under the direct supervision of the Federal Ministry of Agriculture and Rural Development (FMARD). This, they said, will help unburden the ‘loads of responsibility’ placed on the CBN which has been struggling to run the programme efficiently.
The loan was disbursed indiscriminately as the cash was given to those who aren’t farmers or understand what farming entails while the farmers were made to bear the brunt