James Emejo

Writes that the An­chor Bor­rower Pro­gramme (ABP) of the Cen­tral Bank of Nige­ria (CBN) has proven to be a ral­ly­ing point for eco­nomic di­ver­si­fi­ca­tion and in­te­gra­tion of farm­ers into the fi­nan­cial sys­tem


f any­thing, gov­ern­ment’s ef­forts at in­te­grat­ing the in­for­mal sec­tor of the econ­omy into the for­mal sys­tem seemed to have yielded pos­i­tive out­comes es­pe­cially with the launch of the ABP by the CBN.

Launched by Pres­i­dent Muham­madu Buhari on Novem­ber 17, 2015, the ABP is a brain­child of the apex bank, which seeks to cre­ate a link­age be­tween an­chor com­pa­nies in­volved in the pro­cess­ing and small holder farm­ers (SHFs) of the re­quired key agri­cul­tural com­modi­ties.

One the ob­jec­tives was to pro­vide seed and cash to farm­ers to grow the crops and to boost pro­duc­tion of the se­lect com­modi­ties as well as en­sure there is con­stant sup­ply of the com­modi­ties to the agro pro­ces­sors.

Par­tic­i­pat­ing farm­ers un­der the scheme en­sure that their pro­duce at har­vest is supplied to the agro-pro­ces­sor (An­chor), who pays the cash equiv­a­lent to farm­ers’ bank ac­count.

This ini­tia­tive en­sures a read­ily avail­able mar­ket for farm­ers and helps them to re­duce har­vest losses through guar­an­tees.

Es­sen­tially, the scheme tar­gets farm­ers, who pro­duce ce­re­als in­clud­ing rice, maize, wheat among oth­ers; roots and tu­bers in­clud­ing cas­sava, pota­toes, yam, gin­ger; tree crops (oil palm, co­coa, rub­ber; legumes (soy­bean, sesame seed, cow­pea); live­stock (fish, poul­try, ru­mi­nants as well as cot­ton, su­gar­cane and tomato among oth­ers.

In sup­port­ing the farm­ers, the ABP en­sures par­tic­i­pat­ing banks, which work with the CBN lend to an­chors at 9 per cent per an­num for on­ward dis­burse­ment to the farm­ers.

The loan is re­paid by the farm­ers af­ter the crops have been har­vested with the har­vested crops, which must cover the loan prin­ci­pal and in­ter­est.

The pro­gramme has been ad­judged as one of the most suc­cess­ful in­ter­ven­tions in agri­cul­ture in re­cent times as gov­ern­ment pur­sues eco­nomic di­ver­si­fi­ca­tion to re­duce vul­ner­a­bil­i­ties as­so­ci­ated with oil de­pen­dence.

Min­is­ter of Agri­cul­ture and Ru­ral De­vel­op­ment, Chief Audu Og­beh, de­scribed the ABP as be­ing a res­cue mis­sion to drive the coun­try’s food suf­fi­ciency as­pi­ra­tion.

And there had been sev­eral suc­cess sto­ries since the pro­gramme was launched.

Only re­cently, CBN Gover­nor, Mr. Godwin Eme­fiele, in one of the most up­dated state­ment on the ABP said over 850,000 small holder farm­ers had been in­te­grated into the main­stream fi­nan­cial sys­tem through the ABP in line with its fi­nan­cial in­clu­sion strat­egy.

Ac­cord­ing to Og­beh, the fed­eral gov­ern­ment had dis­bursed over N150 bil­lion to lo­cal farm­ers un­der the ABP in two years to as­sist farm­ers of key agri­cul­tural com­modi­ties.

He said the CBN in­ter­ven­tion had boosted lo­cal pro­duc­tion of rice and saved the coun­try about $800 mil­lion in for­eign ex­change.

Ac­cord­ing to him, Nige­ria would cease to im­port rice by the end of 2019 be­cause it would be able to meet lo­cal de­mand of rice be­fore the end of the next year.

But, the road to the suc­cess­ful im­ple­men­ta­tion of the ABP had not been as rosy and has only been sus­tained by the con­di­tions set out by the CBN for all stake­hold­ers in the scheme to abide by.

The apex bank had in its ear­lier guide­lines for the im­ple­men­ta­tion of the ABP, listed far-reach­ing sanc­tions for any vi­o­la­tions by all stake­hold­ers.

The im­ple­men­ta­tion guide­lines de­tailed sanc­tions for any at­tempt by stake­hold­ers in­clud­ing Par­tic­i­pat­ing Fi­nan­cial In­sti­tu­tions (PFIs); An­chor; Small Holder Farm­ers (SHF) and Project Mon­i­tor­ing Team (PMT) to un­der­mine the ob­jec­tive of the pro­gramme.

Specif­i­cally, any PFI in­volved in the di­ver­sion of funds to unau­tho­rised ac­tiv­i­ties would cause the amount diverted to be re­cov­ered by the CBN while a penalty charge at the max­i­mum lend­ing rate of the PFI on the amount diverted would ap­ply. Such PFI also faces out­right ban from par­tic­i­pat­ing un­der other CBN in­ter­ven­tions fol­low­ing an­other in­frac­tion.

In ad­di­tion, any PFI found to be charg­ing unau­tho­rised fees/in­ter­est run the risk of re­ver­sal of the charged fees/in­ter­est and is­suance of warn­ing let­ter to the PFI in­clud­ing out­right ban from par­tic­i­pat­ing un­der other CBN In­ter­ven­tions af­ter two in­frac­tions.

More­over, the min­is­ter had fur­ther as­sured that his min­istry will join hands to en­sure that farm­ers re­pay loans granted them through the CBN’s Real Sec­tor Sup­port Fa­cil­ity (RSSF), warn­ing that there will be no ex­cuses for de­fault.

He said given that re­fi­nanc­ing of ex­ist­ing loans were for­bid­den un­der the pro­gramme, bor­row­ers, par­tic­u­larly farm­ers and in­dus­tri­al­ists were ad­vised to strictly ad­here to the terms and con­di­tions of the loans and utilise funds for the pur­pose for which it was granted.

Og­beh said bor­row­ers would have “to swear to God and your­self that you will re­pay. We don’t want the banks los­ing all their money on grounds of char­ity”.

He noted that the terms of the loans were healthy at seven-year ten­ure, two-year mora­to­rium and a max­i­mum of N10 bil­lion per bor­rower.

He, how­ever, ex­pressed con­cern about the com­mon farm­ers who form the bulk of the pop­u­la­tion as they may be un­able to meet con­di­tions for ac­cess­ing the CBN in­ter­ven­tion.

Ac­cord­ing to him, “We are go­ing to work out a sys­tem where co­op­er­a­tives be­come the bor­row­ers on be­half of their mem­bers since they don’t have rel­e­vant col­lat­eral to pro­vide the banks.

“We want to sit with the CBN and tell the banks that a cer­tain por­tion of your loans must be re­served for peo­ple who are bor­row­ing N300,000 to N2 mil­lion, es­pe­cially young peo­ple who want to add value.”

He added: “We will work out a for­mula where no one is left out be­cause if the big guys take it and banks will rather deal with the big guys to save them the prob­lem of pur­su­ing bor­row­ers all over the vil­lages- the co­op­er­a­tive will do the job.

“We will also talk with mi­cro­fi­nance banks to see if they can charge nine per cent.”

Mean­while, to en­sure trans­parency, pro­bity and ac­count­abil­ity of the fund­ing in­ter­ven­tion, bor­row­ers are man­dated to make the project and records avail­able for in­spec­tion and ver­i­fi­ca­tion by the apex bank.

How­ever, the scheme is not with­out chal­lenges.

There’s no doubt that the re­cent flood­ing in sev­eral parts of the coun­try had re­versed some of the gains so far recorded in the ABP as farm­lands had been rav­aged, caus­ing wan­ton losses.

Also, the se­cu­rity sit­u­a­tion in the coun­try, oc­ca­sioned by con­stant con­fronta­tion be­tween herds­men and farm­ers as well as Boko Haram in­sur­gency par­tic­u­larly in the north­ern part of the coun­try have cast a spell on agri­cul­tural in­ter­ven­tion and lim­ited full suc­cess.

Fol­low­ing the tor­ren­tial rains and se­vere flood­ing in parts of the Nige­ria, the Na­tional Emer­gency Man­age­ment Agency (NEMA) re­cently de­clared a na­tional dis­as­ter as flood rav­aged many states in­clud­ing Kebbi, Niger, Kwara, Edo, Kogi, Anam­bra, Rivers, Bayelsa and Delta, Taraba, Benue and Adamawa.

About 103 lo­cal gov­ern­ment ar­eas (LGAs) across 10 states were re­port­edly af­fected by the dev­as­tat­ing flood­ing, which also af­fected about 1.9 mil­lion peo­ple.

In the process, sev­eral farm­lands were washed away, rais­ing con­cerns over the pos­si­bil­ity a food cri­sis in the near fu­ture.

No­tably, most of the states dev­as­tated by floods are cen­tral to agri­cul­tural pro­duc­tion.

The sit­u­a­tion tends to re­verse the gains so far recorded in agri­cul­ture in­ter­ven­tions es­pe­cially in rice pro­duc­tion in sev­eral states that have keyed into the ABP.

But Og­beh had in­sisted gov­ern­ment will not al­low a food cri­sis next year as it will pro­vide farm­ers with im­proved seedlings to plant af­ter the floods might have re­ceded.

Min­is­ter of State for Agri­cul­ture and Ru­ral De­vel­op­ment, Sen­a­tor Heineken Lokpo­biri, had ex­pressed worry that the de­ter­mi­na­tion of the present ad­min­is­tra­tion to at­tain food self-suf­fi­ciency by 2030 may be ham­pered by the lin­ger­ing herds­men/farm­ers crises in some north­ern parts of the coun­try.

None­the­less, go­ing by the level of com­mit­ment and en­thu­si­asm by all stake­hold­ers in the agri­cul­ture value chain, as well as the po­lit­i­cal will, the ABP can be­come a model for other eco­nomic in­ter­ven­tions to­wards di­ver­si­fi­ca­tion.

At least, the rev­o­lu­tion in rice pro­duc­tion through the use of good agri­cul­tural prac­tices and im­proved seedling has been un­prece­dented in the his­tory of the coun­try with food im­port bill crash­ing dras­ti­cally.

Oil Palm Plan­ta­tion

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