Obinna Chima examines contribution of the Anchor Borrowers’ Programme, a development finance initiative of the Central Bank of Nigeria towards the federal government’s drive towards economic diversification
Since the inauguration of the administration of President Muhammadu Buhari, the focus has been on how to diversify the country’s source of revenue. The need to develop other sources of revenue for the country became very necessary following the sustained slump in the price of crude oil, which is the country’s major source of foreign exchange.
The fall in oil prices also implied that the Central Bank of Nigeria’s (CBN) monthly foreign exchange earnings had fallen from as high as $3.2 billion to an all- time low of $1 billion. This also made the central bank to introduce measures aimed at preserving the country’s external reserves.
Therefore, in order to develop other sources of revenue for the country, the federal government is giving the agricultural much more attention, because of its potential to create job and also boost the country’s foreign exchange revenue.
That was why the president recently stressed the need for agriculture to cease from being treated as development programme, saying the sector must be treated as business. According to him, the federal government was focusing on the development of agricultural value chain. The president pointed out that agricultural value chain allows the intervention of segments of the value chain such as production, processing, storage and marketing.
“Our goal will be to pursue government supported private sector agriculture value chain to make agriculture more productive, efficient and competitive. To provide enough food for domestic supply and create jobs through agriculture value chain,” Buhari had said.
Clearly, this was what prompted the CBN, with the support of the federal government to design the Anchor Borrowers’ Programme (ABP) for rice farmers. The pilot phase of the programme that commenced in Kebbi state has proven to be a success with the federal government currently making arrangement for an extension of the ABP to other states.
No doubt, the importation of rice remains the greatest challenge to the country becoming self-sufficient in the production of the commodity. Rice importation is the worst nightmare to local producers of rice. Indeed, imported brands of rice enjoy greater patronage in markets and stores across the country, which has also remained a source of concern to farmers.
Available statistics showed that the country spends more than N300 billion annually importing rice, a situation both the fiscal and monetary authorities are no longer comfortable with.
That was why the ABP programme was designed 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 utilisation 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 capacity of banks in agricultural lending to farmers and entrepreneurs in the value chain, reduce 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.
Journey So Far
According to report by the Development Finance Department of the CBN, as at April 22nd, 2016, the total number of farmers engaged under the Kebbi ABP was 78,581, while total disbursements so far was put at N4,936,321,400 . A breakdown of the disbursements showed that while under the state government – N2, 971,532,000 (Labour related) had been given out; disbursements under Umza was N1,224,289,400 and disbursements under Labana was N740,500,000.
In addition, the total numbers of farmers supplied inputs so far was 73,001 and total number of farmers enrolled under the bank verification number (BVN) platform was 70,871. Similarly, the total number of jobs created and saved (direct & indirect) was put at 573,958.
“At least seven indirect jobs created per hectare of rice farm (land preparation, nursery, transplanting, weeding, harvesting, threshing, transportation etc.). Total Hecterage 78,581(dry season). Maximum of one hectare per farmer and expected output estimated at 5.5mt/hc : 432,195 mt,” the report added.
In terms of the modalities for implementation, the programme was hinged on three pronged approach namely the out-grower support programme; training of farmers, extension workers and banks; and risk mitigation. In addition, the major stakeholders in the agricultural value chain worked with financial institutions, including the insurance industry and CBN, to create the linkages required to sustainably ramp up production.
The second leg was the training of farmers, extension workers and banks. The training component involved customised value-chain finance modules for banks and an agribusiness training protocol for farmers that is consistent with the aspiration of the ABP.
This was a bullet training mechanism that ‘bundles’ Farm Business School (FBS), Good Agricultural Practices (GAP) and Cooperative Management in a coherent and seamless manner.
The central bank also explained that a comprehensive risk mitigation strategy had been incorporated into the ABP.
The stakeholders in the selected value-chains worked closely with financial institutions, including insurance companies, NIRSAL and the CBN, to create the linkages and transparency required to sustainably ramp production of the identified commodities.
The operating model defines key roles, requirements and obligations of stakeholders in the Programme. The key stakeholders includes the CBN, NIRSAL, federal ministry of finance and agriculture; state governments/agric. development programme (ADPs); anchor companies; financing banks; insurance companies; development partners; farmers/out-growers and project management team.
The ABP is expected to be taken to 14 states namely Kebbi, Sokoto, Niger, Kaduna, Katsina, Jigawa, Kano, Zamfara, Admawa, Plateau, Lagos, Ogun, Cross-Rivers and Ebonyi for rice and wheat farmers to advance their status from small holder farmers to commercial or large growers. Under the programme, the CBN had set aside N20 billion of the N220 billion micro, small and medium enterprises development fund to be given to farmers at single digit interest rate of maximum nine per cent per annum, in line with government’s aspiration to achieve food security.
CBN Governor, Mr. Godwin Ifeanyi Emefiele, who went on an assessment tour of the farmlands under the ABP in Kebbi recently, described the current scarcity of foreign exchange confronting the country as a good riddance, saying local production of various essential goods are now being given top priority.
Emefiele stated that the commitment of stakeholders and expected output from Kebbi state alone had proved critics of the central bank’s policy measures wrong. Emefiele who was full praises for the farmers and the Kebbi State Government for their determination and commitment, noted that with the level of success attained with the pilot project in Kebbi state in addition to what he saw at Sunti Golden Sugar Estate in Niger state recently, it is now a reality that the country can produce enough to feed itself and even export in no distant future.
The CBN governor reiterated that agriculture being the bedrock of genuine economic growth of any nation and that Nigeria cannot be an exception.
“As such, Nigeria with large expanse of arable land ought not to be spending huge amount of money in importing food items at the expense of other competing needs,” he added.
The CBN governor stated that the success recorded by the rice farmers in Kebbi state has rekindled hope in the ability of Nigeria to be self-sufficient in rice and wheat production. He noted that with the sum of N210,000 granted to each farmer, they were able to cultivate a hectre of rice.
He disclosed that with the 78,581 farmers mobilised in Kebbi state under the ABP, the country is already looking forward to a total of one million metric tons rice this year.
Speaking further on what the programme has been able to achieved, the CBN governor stated that with the disbursement of N4.9 billion as loans to the farmers, over 570,000 direct jobs have been created and saved with the multiplier effects, 70,871 rural farmers now own and operate bank accounts and captured under the BVN project.
According to Emefiele, the performance of the programme has also vindicated the stance of the central bank that when given incentives and the necessary support, Nigerian farmers would be able to fill whatever gap that exists between the demand and supply of agricultural products like rice, wheat, cotton and palm produce.
On his assessment of the programme, the Minister of agriculture, Chief Audu Ogbe, said the level of activities in the rural areas visited by the team have shown that with Kebbi State alone targeting one million tons of rice out of the projected seven million tons required by the entire country, self sufficiency in rice production was very much at sight by the time other twelve states identified as rice producing belts harvest their produce. He commended the efforts of the CBN for reinventing agricultural practice into profitable business venture.
The minister further stated rural areas remain the catalyst for viable economy development as such, deliberate efforts are being directed at opening up the rural areas just like what was witnessed in kebbi state.
On his part, the kebbi state Governor, Alhaji Atiku Bagudu said that farmers in the state had been adequately mobilised towards the attainment of the one million tons of paddy by providing them with necessary inputs as and when due. He also noted that with assurance of availability of market for the produce, farmers in the state were already looking forward to the repayment of the loan facility extended to them at the beginning of the farming season.
While acknowledging the pivotal roles of the both the CBN and the Kebbi state government in the provision of loans, irrigation equipment and fertilisers, the farmers look forward to a bumper harvest this season. They also appealed for an appreciable increase in loan facility to enable them to cultivate more land and maximize output.