Benefits of CBN’s Rice intervention

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Emefiele

By Ummi Kabir

The thrust of the agricultural policy of the Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, especially the Anchor Borrowers Programme (ABP) is essentially to provide farm inputs in kind and cash to smallholder farmers to boost production of farm commodities which states have comparative advantage to produce including cereals namely rice, maize, wheat, cotton, roots and tubers namely cassava, potatoes, yam, ginger, tomato, poultry, oil palm, fish, sugarcane among others.

The apex bank’s intervention was particularly strategic towards the resuscitation of moribund sectors of the economy in line with the present administration’s agenda to diversify the economy from oil as well as preserve foreign exchange. With Nigeria’s then annual rice importation at over $2 billion, it was worrisome enough for the government and offered sufficient motivation for the CBN chief do something about as it constituted a major drain on the nation’s foreign reserves.

For some, the policy of Emefiele, regarding his decision to delve into agriculture was a needless deviation from the mandate of the apex bank which centres on monetary policy and financial systems’ stability. Interestingly, that deviation, like a master stroke, is giving the country a lot to cheer especially with the unexpected intrusion of COVID-19 into the nation’s socio-economic life. It has been emphasised at various fora that had Emefiele not done what he did in the agricultural sector, when COVID-19 came, Nigeria would have been a real dire strait.

The Anchor Borrowers Programme, the arrowhead of that policy, as a result of the doggedness of the CBN Governor, is yielding multiple benefits in terms of job creation and what has come to be known as the rice revolution which is about to transform the country into a net exporter of rice. It is also justifying every resource and effort invested in the sector. The thinking behind the policy is for it to create a demand-driven ecosystem that will link small-holder farmers with agro-processors.

Fundamentally, it is designed to create and ensure linkage through a financing framework that is aimed at relating these investments across agricultural value-chain. Understandably, this thought process derives from the nation’s experience, over the years, which has shown that there are enormous potentials in the agricultural value-chain and there is immense local capacity that can be optimized to guarantee food security.

The success of the policy can be measured by the significant increase in the number of rice mills.

Within the period, over 95 standard processing mills across the country have been built and made effectively operational. Commendable also is the contribution of private sector players operating under the Private Prima Anchor. They participation is the programme has, in a significant way enhanced the need to improve productivity and drive growth.

It is important to also note that a Public Private Partnership (PPP), an initiative by the CBN, is further expanding the possibilities of the programme as far as food security is concerned. It is an arrangement in which the states are expected to make available land for cultivation and then the private sector operators will use the land in partnership with state governments to increase output.

This ABP policy came into effect in 2015 and since then, the CBN has financed over 1.3 million farmers and in the process facilitated the cultivation of over 1.3 million hectares of land across the country as well as the production of an average of 5.5 million metric tons of paddy at four tonnes per hectare. It is from this perspective that we view the CBN’s role in the attainment of President Muhammadu Buhari’s pledge of creating 10 million jobs. The multiplier effect of financing 1.3 farmers in terms of people they engage as labourers and/or harvesters for each hectare is capable of creating further three to four additional jobs.

It is estimated that the Anchor Borrowers Programme has received in excess of N264 billion injected through the deposit money banks and other cosmetic financial institutions. A sizeable chunk of this money went into the rice project for reasons that are obvious.

The seeming focus on rice can be easily explained as the crop is a major staple food in Nigeria, and had formed a significant part of the import bill. So, the bank’s interest is to really develop local production capacity which would do a couple of things to drive productivity, to boost employment because small holder farmers are going to be involved in this. Ultimately and very importantly, it will conserve foreign exchange requests for rice importation.

Another reason that motivated his foray into agriculture can be gleaned from the provision of Section 31 of the CBN Act. This part of that law makes it possible for the apex bank to carry out development financing as well as involve the banks in such development finance activities while aligning with the strategic mandate of ensuring price and exchange rate stability. To that extent, it is pertinent to observe that food prices and unemployment are key indices of the macro economy which should interest the CBN because food price inflation adds to the basket in tracking total inflation.

And when it appeared that most of the previous governments’ economic blueprints to revive the economy had been mere statements of intent rather than action, Emefiele, in a practical and dynamic way, took the bull by the horn to undertake a difficult mission to stop the importation of commodities which the country can easily produce.

The CBN governor’s efforts towards food sufficiency especially in rice production have now materialized and there has been a revolution in local rice production, as most of the inactive rice mills across the country have suddenly received life again while the staple has become the favourite in most Nigerian homes.

Emefiele’s feat in revolutionizing agriculture especially in the areas of rice, tomato, milk, textile production had pitched him against powerful interests in the society, who hitherto benefitted from a largely dysfunctional system as they continued on huge food import at the expense of the country’s hard-earned reserves. His passion and commitment to economic diversification had been strengthened as well as applauded from far and near, as those who never thought a revolution could ever happen in rice production have eaten their words.

He had stressed that agriculture presented the major opportunity for long-term sustainable development in the country and noted that in spite of the current levels of unemployment, the sector remained vital to the efforts of the federal government in diversifying the country’s economy away from oil. According to him, agriculture has been proved to possess the potential generate huge revenue for those who ae involved in it and remained pivotal in job creation.
Kabir is a public affairs analyst