By Donatus Uzoma
The global food security challenge is straightforward: by 2050, the world must feed nine billion people, according to a report by the World Economic Forum (WEF).
By then, it is estimated that the demand for food will be 60 per cent greater than it is today.
Owing to this, the United Nations had set ending hunger, achieving food security and improved nutrition, and promoting sustainable agriculture as the second of its 17 Sustainable Development Goals (SDGs) for the year 2030.
Indeed, everybody needs food. But the complexity of delivering sufficient food to a national population and to the whole world’s population shows why food security is such a priority for all countries, whether developing or developed.
Africa is expected to double its population from one to two billion by 2050. Populations in the developing world are also becoming increasingly urbanised, with 2.5 billion additional urban residents projected in Africa and Asia.
For Nigeria, a country of over 200 million people, and projected to be about 450 million in a few decades, the present Covid-19 pandemic has shown that dangers lie ahead if the country does not begin to depend largely on what it produces locally.
Therefore, in achieving food security, the agriculture sector has to become more productive by adopting efficient business models and forging public-private partnerships.
That is why the Central Bank of Nigeria (CBN), under the leadership of its Governor, Mr. Godwin Emefiele, has been aggressively supporting the country’s quest to attain food security.
The Anchor Borrowers’ Programme
The ABP which was launched by President Muhammadu Buhari in 2015, was designed to assist small-scale farmers to increase the production and supply of feedstock to agro-processors with the aim of creating an ecosystem to link out-growers (smallholders) to local processors.
The programme has increased banks’ financing to the agricultural sector, enhanced capacity utilisation of agricultural firms involved in the production of identified commodities as well as the productivity and incomes of farmers.
The anchor borrowers’ programme has also assisted rural subsistent farmers to reach commercial production levels.
The thrust of the ABP is the provision of inputs in kind and cash (for farm labour) to smallholder farmers with a view to boosting the production of rice, maize, poultry, sorghum, cassava, tomatoes, cotton, palm oil, Soybean, among others.
Presently, the CBN has restricted importers of 43 items from accessing dollars from its regulated forex windows in its bid to encourage domestic production.
Also, other fiscal policies are making it increasingly unfavorable for the importation of those items. Currently, almost all the states are involved in the scheme.
The CBN has taken development financing a notch high in recent times because, like the fiscal authorities, it believes that diversifying the Nigerian economy will not only make her self-sufficient in food production and industrial raw materials, but also create jobs for its teeming youth population.
According to Emefiele, the Bank has sustained its intervention efforts in order to help catalyse growth in critical sectors of the economy such as agriculture and manufacturing.
This the Bank has done through intervention programmes such as the Anchor Borrowers’ Programme (ABP), the Commercial Agriculture Credit Scheme (CACS), the Bankers Committee Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS) and recently introduced Commodity Development Initiative (CDI), which focuses on developing the value chain of ten focal commodities: Cassava, cocoa, cotton, fish, livestock/dairy, maize, oil palm, poultry, rice and tomatoes.
Following success recorded by the scheme and in line with efforts to boost food production as well as help the country avert the looming economic recession, the CBN recently disclosed that it has set aside about N432 billion to fund the value chains in nine commodities in the 2020 wet season.
The Director, Development Finance Department of CBN, Yila Yusuf, said over 1.1 million farmers, cultivating over one million hectares of farmland were expected to benefit from the loans that would help to produce a collective output of 8.3 million metric tons. Yusuf said the focus on the 2020 wet season was to ensure the provision of improved seeds that would incentivise farmers to return to their farms.
He maintained that the CBN adopted the value chain approach across all the commodities to ensure that every player along the entire value chain, from the farmers through to the processors, was financed.
The CBN’s funding of the ABP for the 2020 season, Yusuf said, was the highest since the inception of the programme in 2015. He said the proposed funding for the nine commodities was a significant move by the CBN, considering the successes recorded in the 2019 season that contributed to shielding Nigeria from any food shortage, particularly rice.
Also, CBN spokesperson, Isaac Okorafor, said the bank was committed to aggressively fund its agricultural programmes, particularly in the 2020 agricultural wet season, to ensure the farmers go to work immediately on the cultivation of the identified commodities.
Intervention in Various Commodities
For rice cultivation, working closely with key stakeholders in the value chain, the CBN sought to significantly decrease import bills and encourage rice production locally. In the 2019 season, the Paddy Aggregation Scheme was enhanced to accommodate more millers, while many medium and large-scale investors were financed under the Commercial Agricultural Credit Scheme and the Real Sector Support Facility windows. A total of N36.033 billion was released to 256,711 farmers for the 2019 wet season to cultivate 315,954 hectares. A rice yield of 1.58 million metric tonnes is expected from that process. Meanwhile, of the total outstanding amount of N55,436,688,923.30 due, the sum of N28,108,835,277.30 has been repaid in cash, while 17,796.07 MT of paddy, amounting to N1,957,567,370.00 has been collected so far as repayment in paddy.
For the current 2019/2020 dry season farming, a total of 123,941 farmers from RIFAN, NECAS and other private anchors have been identified and have also commenced the validation process in conjunction with the partnering banks.
Like the rice sector, the Cotton, Textile and Garment (CTG) industry also enjoyed a flurry of intervention activities in 2019. The objective was clear: Catalyse the local farmers to produce 450,000 metric tonnes of cotton in three years, which, at 40 per cent conversion rate, translates to 18,000 metric tonnes of yarn. In addition, the CBN and other stakeholders sought to increase cotton production from 80,000 to 200,000 in 2020; increase capacity of ginneries and textile sector industries in Nigeria to enable it attain self-sufficiency in cotton production in Nigeria by 2020.
UNVEILING THE COMMITMENT OF THE CBN, EMEFIELE, HAD PLEDGED THAT THE BANK WOULD provide financial support to textile manufacturers AT SINGLE DIGITS RATE, TO REFIT, RETOOL AND UPGRADE THE TEXTILE FACTORIES IN ORDER TO PRODUCE HIGH QUALITY TEXTILE MATERIALS FOR THE LOCAL AND EXPORT MARKET.
To further drive home the point, the Bank, in line with a Presidential directive, also restricted access to foreign exchange from the Nigerian foreign exchange market for the importation of ALL FORMS OF TEXTILE MATERIALS AND SUPPORT THE IMPORTATION OF COTTON LINT FOR THE USE IN TEXTILE FACTORIES, WITH A CAVEAT THAT SUCH IMPORTERS SHALL BEGIN SOURCING ALL THEIR COTTON NEEDS LOCALLY BEGINNING FROM YEAR 2020.
Determined to achieve self-sufficiency in the textiles and garment industry in the next five years, the mobilization of cotton farmers has commenced for the 2020 farming season with the target put at a minimum of 300,000 cotton farmers.
Following its game-changing success in the rice and cotton sectors, the CBN also sought to modify the narrative in the cassava sector by resuscitating the cassava value chain in Nigeria.
Piqued by the fact that Nigeria, despite her status as the world’s largest producer of cassava, spends over $600 million annually on the importation of cassava derivatives such as starch, glucose and sorbitol, the CBN facilitated the meeting of stakeholders in the sector with a view to repositioning the sector for greater output.
Available data indicate that the country currently produces about 53.0 million MT but with a very low average yield of about 7.7 MT per hectare, compared with Indonesia’s 23.4 MT per hectare and 22.2 MT per ha in Thailand. Of the 53.0 million MT of cassava produced in Nigeria annually; more than 90 per cent is processed into food for human consumption whereas a significant industrial demand exists for the output of processed cassava, primarily as substitute for imported raw materials and semi-finished products.
As rightly noted by the CBN Governor, Nigeria, compared with any other country of the world, has one of the best climate and land resources to produce and process sufficient cassava. Under the arrangement, which the Ogun State Government has already embraced, the States are expected to clear large expanse of land for cassava cultivation, allocate land to unemployed youth and existing farmers while the CBN provides funding for the project from its Accelerated Agricultural Development Scheme (AADS).
In 2019, 15,569 cassava farmers were financed with the sum of N2.718 billion to cultivate over 15,000 hectares of land across 19 States under the Nigeria Cassava Growers’ Association. Similarly, the Bank financed eight processors with the sum of N11 billion to produce the various identified derivatives such as ethanol, starch and sorbitol.
In terms of palm oil cultivation, the desire to restore the Nigerian oil palm sector to the glory decades of the 1950s and 1960s, when it was the leader in the world oil palm market, prompted the CBN to again partner with stakeholders.
From controlling about 40 per cent of the world market, Nigeria slipped to the fifth position, barely producing three per cent of the global supply of oil palm.
That sad narrative appears to be changing now with the intervention of the CBN in the sector. Not long ago, the Bank facilitated a meeting of stakeholders, including State Governors and other top government functionaries from the oil palm producing states to get their buy-in and set a partnership model that would stimulate investments in the palm oil plantations, such that oil palm production will increase from 1,250,000 metric tonnes to 2,500,000 metric tonnes by 2023.
As at January 2020, a total of N30 billion has been disbursed to seven oil palm companies to support their expansion programmes. The CBN said it expects 40 applications from investors across Nigeria with an expected total hectare of 126,694 hectares.
For tomatoes, when the CBN in 2015, unveiled a list of 41 items for which importers could not access foreign exchange from the Nigerian Foreign Exchange Market for, tomato and tomato paste featured prominently on that list. That was before the launch of the Tomato Policy Framework in 2017, which sought to reduce the about $170 million spent annually on importing 150,000 metric tons of tomato into Nigeria.
The policy, which is being implemented in collaboration with the Federal Ministries of Trade and Investment, Agriculture and Rural Development, Finance, and Water Resources; the Bank of Industry and the National Food and Drugs Administration and Control, aims at boosting tomato production, improving the value chain and attracting investment.
In addition, the policy seeks to increase local production of fresh tomato fruit required for fresh fruit consumption and processing; increase local production of tomato concentrate and reduce post-harvest losses.
In line with that objective, the CBN introduced the Commodity Champion model in the first quarter of 2019, to stimulate production of tomato and strengthen the end-to-end linkages in the value chain from input supplies to the final Consumer. The Bank adopted the strategy of out-grower contractual arrangement in the short to medium term, and backward integration in the medium to long term.
The Bank’s efforts have resulted in the mobilisation and validation of about 140,848 farmers from various Tomato Farmers Associations across 25 States in Nigeria. These farmers are to be financed under the Anchor Borrowers’ Programme (ABP) where they would be linked to proximal processors where applicable, or financed to produce fresh fruits for direct consumption, which constitutes the largest use of tomato in Nigeria.
In terms of livestock, borrowing a leaf from the huge successes recorded in the rice, cotton, cassava and tomato value chains under the Anchor Borrowers’ Programme (ABP), the CBN met with some milk importers, during which the Governor wooed them to take advantage of CBN’s low-interest loans to begin local milk production instead of relying endlessly on milk imports.
To change the narrative of heavy dependence on milk imports and its attendant implications for the economy, particularly given the fact that cows can be bred to produce milk commercially, the CBN began a policy to encourage backward integration to conserve foreign exchange, reduce internal insecurity arising from pastoralists/farmers’ clashes and create jobs for its teeming population.
The Bank’s partnership with states and private investors is beginning to yield fruits. For instance, in Niger State, the Government has allocated land to four dairy companies at the 31,000 hectares Bobi Grazing Reserve which is inhabited by over 700 pastoralist families who own about 300,000 heads of cattle. 10,000 hectares of the land was allocated to FrieslandCampina WAMCO, while 4,000 hectares each was allocated to Chi Limited, Neon Agro and Irish Dairy. Work by the companies is at various degrees of completion.
Similarly, Arla Group in Kaduna State, Promasidor in Ekiti State and Integrated Dairies Limited in Plateau are in partnership with the respective State Governments to upgrade or develop the Damau Grazing Reserve, Kaduna; the Ikun Dairy Farm, Ekiti and the Wase Grazing Reserve, Jos.
Like oil palm and groundnut, which were major foreign exchange earners in the 1950s and 1960s, Cocoa slipped down the chart on the list of Nigeria’s top crops for export.
The value chains of other commodities such as maize, poultry, fish, aquaculture, among others, also witnessed interventions by the CBN.
Therefore, it is expected that initiatives would in the long-run support the federal government’s drive for food security and assist poor rural farmers as well as support the government’s push for economic diversification.