SUNJ)AY PUNCH JULY 17. 2011
Agric - Economy
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Taking agricuiture to the threshold of growth IFEANYI ONUBA
y a ll standi'ltds. agriculture has been a major component of the real sector of the economy. U Ule .....onder the Federal Government had in the past three decades. with the Cenlral Bank of Nigena. designed and implemented various programmf:'S <Inc! Khemes a imed at ackhessing problems associated \~ilh low Investment in agriculture. These interventions fonged from instruments such illS the regulation with van ... n! o r credit quota and interest rale ceihng to institutional 5UPPOI'ts such as the establishment of
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the &nk of Agncuhull! and the Bank of lndus" y_ Others are Nigenan Agricultural Insurance Company. Agncultural Crechl Guarantee Schenle r"\lnd, I~ N200bn Commercial Agriculture Credil Scheme, the N.1OObn Power and Airlines Intervention Fund. the Small and Medium Ellterpri~es Credit Guarantee Scheme and the N200bn Reslructuring ilnd Refinance Facility. BUI all th~ schemes. according 10 CBN'! 3(ling Di rector. Development Anance I)ep<lrtment. r.lr Paul E1uhak.ve. have nol achi~ Ihe desn-ed level of funcling thill will lake Ihe counby'$ agricullure 10 the cructal Ihreshold o f r;elf-sustaliling and growth For instance, he said. MOnly 32 million hectares or 46 pe r cen t of Nigerill's lIrable land is unde r cuilivCltion. Fertilizer consu mpt io n III Nigeria. es timated at 7kg pet" OCI. is one o f lhe lowest in Sub-SiihaTiln Africa ~Nigelian fllrmers haw limited access to oedi!. wilh lending to i'tgricu[lule represenling a palhy two per cent of aggregi'lle lend ing. far below the six pel cenl in Kenya and 18 pel cenl In Brcuil ~ Nigeria loses belwe€n 15 and 40 per cent of ils pos t harvest outPUI dlle 10 many facton; ranging from poor or non·exi! tent roads. poor ~chces to lac k of processing fllcililies. For tile lenders. he said thClt Ihe scenario h3d been a nighlmClre as the agricuhul<ll value chain currenlly had some missing links. He ~id. MFarmets lire nol receiving the nght quantity and Quality of inpu t.s. For e.'ti'l mple. the annu;)l need for highyield ing seed is one million Ions per annum bul Ihe coun try produces 8.000 ton5 per annum-less Ihan one per cenl 0 1 Ihe nation·s need MThere has been. therefore. a VIcious cilde of low lending. poor inputs. low Yield. low uplake. high rISks and high 10S5f!5 are 100 high ~ In an effol t to put III plClce II meth/lnism 10 break this '5lagnlllio ll and decline in the lIgncu[tural sectOf. the CBN last year engaged Ihe Alliance for Green Revolullon in Africa to deuelop Ihe Nige ria Incentive-Based Risk Sharing System for Agricullural U!nd ing
The new innovtltlve. which IS targeted al de -ri sking the lending to the agricultu ral sector \Vas fo rma lly lnauguraled in Abuja on Tuesday by President Good luck Jonathan. Speaking at the evenl. the GovemOT. CBN. Mr. Lamido Sanus!. 5aid Ihllt Nigerians were spending N630bn annually on Ihe importation of agricullUr.l1 products. The CBN boss disclosed thIS while delivering a keynole add ress at Ihe stakeholders' conference on li!k sharing syslem for agncullura l lending. Sallusi lamented tha i despite Ihe contribution of the IIgriculiu re sector (tlboul 45 per cen t to Gross Domestic. Product). it could only get meager four per cent of the Federal GO\.'ETn menl"s lolal budget He wClrned that tile anomaly. II nol corrected. could hamper the currenl ooministrlllion's quest to grow its cumml agJicuHurllioulpulby 160 percent from N 1S.25tn toN39 4tn by 2030. Giving a breakdown of Ihe food import bill. he said Ihal whellt with Nl65bn COnstituled Ihe largesl amount. while fish (N I05bn). nee (N7Sbn). and sUg<)r IN6Obn) followed in that order. lie Silid. MGross underfundlllg of Ihe sector is a major challenge as l?XE'mplilied by the fact thai less than fou r percenl o f the Fedel·al Governme nl"s budget has been allocated 10 agncu lture si nce 2006 "This is contrary to Ihe 2003 AfriCM Union Maputo Declaralion that dlrecied member counlTies to illCleilse investment in the &glicullural seclor 10 at least 10 per cent of the national budget by 2008. Mr"\lrlhermore. private inveslmen t in the agricullural value chain 15 at a 10\\' ebb owing to perceived risks. distortions and uncertainties such Ihal. Nigerhm agriculture is today one of the most underfunded in the \.VOrld. ~ He a lso said. MThe challenges highlighted have resulted in Nigeria losing the leading position it OCCUPied in Ihe 19605 in the exporlation of key CIQp!o such as cocoa. groundnul. colton rubber and palm produc;2. It is on record IhClI during thllt decade. Nigeria accounted fOf over 60 per cent. 30 per cenl and I S per cent of global palm oil, groundnu t lind cocoa exports. respectively MToday. Ihe (everse IS the case. as Ihe Nlgerill's agricullu r/ll Imporl bill slands til N630bn annuO?!lly. Lalge food products Imports include whell l (N I65bn).lish (N IOSbn). rice N75bn. Md $U9"r (N6Obn) In IIle interest of ou r dear Mlion. tillS trend must be hailed ~ The Clpex ~nk boss said thai Ihere WM lhe need 10 reposition the Abuja Seculilies i'lIld Commodities Exchange 10 enable it 10 deliver on it5 mandate. He said. M At presenl. the commodity exchange is handit<tpped by iMdequale funding and lack o f clarily in its corporate governance. ~A proposed solu tion by the CBN is for the FWerai
Private investment in the agricultural value chain is at a low ebb owing to perceived risks, distortions and uncertainties such that Nigerian agriculture is today one of the most underfunded in the world'
Government to hClnd over ASCE 10 il lo nurture for efriciency and effectiveness. similar 10 lhe role played by the bank al Ihe early stages of the estllblishment of the Sea.mhes and M Exchange Commlssion . He explained thallhe fi ve pl1lars o[ NIRSAL would help to elnnlflale the risk in lhe f1n11ndng value dlaln . build long term ca!>ilbililies and institulionalise the incentives lor agricultural lending He Mid IhClI lhe N7Sbn NJRSAL fund 1.I.'Ould be lequiled to se l up the fJVe pillars TIley are fisk shanng facility (N46.5bn). insu rance facUity (N4 65bn ). technical assistance faCility IN9 3bn). agricul turlll bank Ti;"lting system IN I.55bnJ. and bank ince ntive mechanism INI5.5bn) Presidenl Jonathan. while decillring the conference open. said the Fede~1 Government WCIS already implemenUng seve~l programmes aimed al ensuring beSl praclices in Ihe agtic.ullure sector. For inSlance. he said Ihat the government hlld besun !hi" process of tackling the mfraslnlcfure gilpS such as rcadi and powel. Represented by VICe-President Namadl Sambo. he said. "We are already implementing several p logrammes aimed lit promoling 001practices in the agricu lturn[ dl!Velopmen t. These efforts have yielded some posllive results because sector analysis on Ihe average showed Ihal in Ihe 1<151 five years. agricullure hM provided abooi 50 pel cenl in employment MTIle infrastructul<ll gaps are belllQ fixed . For instllnce. we a le rehabili tating the railway system and the construdion of 10 power planls thi'lt would help to gen!"!ale 5.000 megawalts is 90 per cen t complete M The initiatives. he stressed. \vou ld help to put Ihe country on the righllrack.