Wed nesday, July 6, 2011
THIS DAY, Vol 16, No. 5917, Page 35
BusinessWORLD
Unlocking Nigeria's Potential via Agricultural Lending Following the 'transfonnation agenda' that has been enunciated as the focus of President GoodluckJonathan', administration, particularly in ensuring that the nation's agticultural sector is commercialised and mechanised, Obinna Ollina, writes on the Nigerian Incentive-Based Risk Sharing Agticultural Lending (NIRSAL), which has been proposed as a vehicle to revamp the ailing sector ycr the yean, the misenlbl e pcrfonnall(:e of the Nigerian agricultural secto r, in lemu of ilS contribution \0 country'i IOtal revenue h.he been a source of concern 10
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BANKING & FlNAl'{CE
feed ils people. Yel ~gricu hure sti ll offers immense opportu nities for growth. By tr8Il$' This had led to the cn:alioo of various ini lia~ fonning the 5C'ClOr , Nigeria ClIIl produce more Ih'es aimed 31 laking the agnc secwr out of the food to reed itse lf, lower the COSI o f foOO doldrums BUI despite all thai, the 5eC10f hu imporll. and even become a major food IllIgel), remained pro~tnue and has conti nued exporter and a bn:adbaske t for the whole of di5COUrugcd in\'cst0f5 in the sector, who have West Africa. since diV0'5iftcd in to other line of business. "Agricu lture tan generatc additional Srowth BUI as the world popolmion explodes and Ind employment. We estim:l\e mat by increas· en\'ironnltnlal chlllllle5 lind issues threaten food ing yie ld ttnd acreage, production can lrow a security globally. allenlion is gradually luming massive 160 per cent by 2030, rising from 599 mon: and morc to agriculture. Countries and billion in 20 10 to 52S6 billion in 2030. Already Ins titutions ha\'C continued [0 push for large- in 2001 ·2007 , il accounted (or !II per cent of scale agric uhural LramifOrmalion as part of job creation in Nigeria. In shon , agricu ltun: effortS 10 achieve illCTCilSCd growth and reduced . harbours the key growth reserves 10 dIh'e rur.l! poVf;ny. Nigeria's economic greatness." Ln fad, disturbed by the development, the It however insis ted that the country must first Nigerian Banurs' Commillec ill conjuncli on tac~ major challenges such Wi low produttivwuh !he Centr.LI Bank of Nigeria (CBN) has ily. 5aying that the average fanner prodtJCC5 less inilialai a prescription aimed al repositioning than 75 per cent of household foOO require· lhe 3gricultural production ill the country. menl.S. TIle bankers, which consequently held a ton1be n:pon listed other challenges to include: (cn::nc.e 011 the Nigerian loccn.h'c- Based Risk infrolStnJClure - roads. energy, storage are insufSharing AgricullUral Lending (NlRSAL) , an ficient . Research and Development (R&D) , a idea, which has beell propo5td 10 drive agricu l- key factor in the uansformation of the new agritural revo lution in the country, aid the meeling cultural powerilou5es, as shown in the case of was 10 ellgage Pr£sidc:llt GoOOluck Jonalhan. 011 Brazil, need 10 be intensiflC'd in Nigeria. lhe toOCc:pt:. -Agriculrural chains ill the counuy 8ft broAccording to the CBN. ~ Nigerian agritul· ken, mi ss ing ou t vi tal links for ins tan cc, lure SCCIOf SlandS before an enormous opponu- be tween the processors and seed manufactur· lIil), and 1Il order 10 captun;: that proSpCcl, B rev- ers, Est im3tes put tbe natiorf5 impro\-ed seed o lutionary approach is required (or agricuhuml demand al over 1 million metric ronnes a year, \'lllue cha ins and ag,ri culrure financing by com· yet, the country produl%S only a mere 8,000 rT\a!fC ial oonKs. metric tannes;' illlldc:d. The C UN had in August 2010, engaged the VICe Pr£sident for Policy and Partnerships, Alliaoce for a Green RevolUliOll in Africa AGRA. Or. Akin Adesina arg~d thai ug ricul 1 (AGRA) to de\'elop the NIRSAL - a new inn D- tun: development has 10 be encouraged in \'llli\'e mechanism targeled at de-risking lend· Nigeria so as to uansfonn the economy,genering 10 the agricultural sector. ate jobs and equiwblt. gwwtb. I·le noled that the According to the CBN. NLRSA L is I wide:· cou ntry has become a net import er of food, ranging, alllbitious programme whose gOlils showing lha.t il spends abou t 54 .1 billion;,. year fully align with Pr£sident Jonat han's adminis· importing foOO items such as wheat. fish rice , \r.ltiOll 's commill}le mto achieving foOO sccuri- sugar, and Others. I)" increased job mllion and pove rt y reduclion "When you look at the: history of lhe agricul· in Nigeria. ture sector, in the: 60s. we used to hlIve the groundnul pyramid; we used to hlIve palm o il , AG RA Report cocoa among others. Nigeria was mown as an A repon by the AGRA, founded by I fOfIl1Cr agricullLlra l basket, not on ly in the: coun try, but Sec~tat)' Ge neral of the United Nations. Mr. global ly. Today, .....e have lost all thai. So we are Kofi Annln, showed thai agricuh ure accou nl.S actually importing inflation beelUse as global for rough ly 41 per cent of Gross Domestic COmmodi ty prices 1ft rising, we life importing ProdUCt (ODP) in Nigeria and SO percent of the food and by tnat we are dri \'ing innation in the economically lICii\'e population in the country. country;' Adeshina said. Figures revealed by the report showed that if lhe Nigerian gove:rnmc::n t is sincere in its pover- eBN's Position on NTRSAL ty reduction campaign, ;1 absolu tely has 10 fix The pR' 5e nt m!lI\age lnent ofCBN had in 2009, agriculture . e nunciated a fouf· pillar reform prog~me to 1be repon also showed that Ihe country has deal wilh the precarious ~Ia\t. of the banking 70 per cent of itSi popu l31ioo in nJral areas ami sector occlSioned by the global economie and abou t 70 per cent also living on less than one financia l crisis. 11le fefomlS were focused on dollar a day. It a ttributed the 70 per cent popu· enhancing the qualilY o f b:lnb, ~ablishing lation figure Slill living o n 0lIe dollar a day to a nd maintaining firnrncia\ SI.Ilbility, enabling the fact that the Nigerian lIgricuhural sector is healthy financial sector evo lUlion, and cnsuri na still 8t the subsis tence leve l. It Slaled that since thpt the fi nanc ial sector contribu tes to the: real 2000, agriculture has been the slowest grow ing economy. All these, lICCOf'ding to the apex. bank, 1ft scaor. growing rouSh l)' al abou t 5.1 per cent part of its objectives o r achieving the Fina ncial pe r annum. AGRA said: ~ Nigeria represents a macro- System Strtltcgy 20"..0 (FSS 2020) as wellll! the cosm of agric ultural opportunities. Agricu lture national blueprint, Vtsion 20: 2020. 1be CUN maintained Ihal dc:spile varioos pillys II. huge role in lhe econolll)" H islori.:all y, a growth 5eclor. agricu ltu re has slowed over Ihe l:lSI decade and today it is uuderperforming. • COllt'd 011 36 Absurdly, Nigeria ~lies heolvily on impoi1~ to
successive government.
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FULL GOSPEL BUSINESS MENS FELLOWSHIP INTERNATIONAL (The Happiest People on Earth) South West 4 District Presents
THEME:
AtA TIME like THIS DATE:
Wednesday, July 6, 2011 TIME:
5.30 p.m . VENUE:
Banquet Hall , National Arts Theatre, Iganmu, Lagos SPEAKER:
Arc. Adebowale ADEMO You are Invited!! COME EXPECTANT, for the LORD will do great things. His Banner Over Us is Love
ANNO.UNCER Arc Ifeanyi ODEDO National President, FGBMFI Nigeria
Mr Chibuzor EZE District Coordinator SW 4 Lagos
Page 36, TI-llSDAY, Vol 16, No. 5917
Wedn esday, July 6, 2011
BusinessWORLD
banking & finance
Unlocking Nigeria's Potential via Agricultural Lending· COllt'd fro", 'tprognllnmes desIgned by \'lITious agencies to uplift agriculture . which was ncgkcled
following 11M: :td\'Cnl of oil in the: country. very little: success has been achieved. The: regulator listed some of these interventions :u the establishment o f NAC O (toda)' called Bank of Agricu lture).
Bank.
of
Industry (DOl) , Nigerian Ag ricult ural insurnncc (ompan), (NAJC) as well all lite Agr'!:ullural Credit I ;uarlnlec Scheme Fund ~ ACGSF\
II add~ :- ''G6o!I- a$ these ;cherne... hive tEen . ...e are ~I to attain the critical min imum len~[ of funding that
will take Nigerian agriculture to the crucial threshold of self·sustaining takc-()fT and gTOWIII. For inSlanCl:. onl)' 32 million hectares or 46 per ;:ent of Nigeria's arable land is under cultivation. " Ftni liscr consumption in ~ igcTII. eslilll:Ued al 7kg per 1a, i~ one of Iht: 1000e5t in su b·Sahar.m Mrica (SSA) while ~ss than 10 per celli of Irri,gable land is under Im!llion , Ni!eri<l ll filrmcrs have limiled IICce~s Iu Cll:dil wit h tending 10 agricul ture rcprc· ~nll ng u palt ry 2 per non t of Iggll:g3te knding . far below he 6 peT ct:nt in Kenya and 18 percent In Bnllil. -Nigeria losrs bet""«11 IS· 4() per ctnl of its po<;l-hOlf'\'eSI OUlpul due.- to many faclors mngUl! from poor or 000' ex i ~lent road~, through poor practices to lack of proo:ess· ing facililies, For the: lenders it hn 5 been ~ nightmare. With ft' disru pled Villuc ch3ins lacking eOI'er for \\'cathc-r ri sks. inaccessible markets for rann produc t!. poor lransport infrastructure to mol'e prod. ucts frum the rarrru; . M wc ll u 101Y uptnke rrom proces· 'lOB and markctcrs. Farmers cannot: be: trusted to make moncy and repay loons. In fac!. many o f Nigeria's agricultural \'alue challll ha\'e mi~ing linkll, Farmen arc nO! rece il'in! th e right quanti. ty and quality of inputs:' it
called thc Comprc:hensive African Agricultural Developmcnt programme "'here governments ha\'e to commit atlc:ast 10 per cent of their budgct into agricultu re , "Niger, Ma li, TanUinia. Kenya have all Cl\ceeded this target. Even if we do that, there is anOlher question of the quality of eJl,:pend iture il.5c:Jf. We arc spendi ng most of our money in subsidy. we arc not: invest ing in infra· structure. and we arc: not inl'cs ting in irriga tion, or Resean:h and (kI'!:Iopmc:nt. SC5 it is ndl ju~. aboul tII i~ii'1g the experiditl.lrr: for agriculture. it has to do with thc quality of inl'estment." Adeshi na noled, ~I e stressed th ai the coun· try has the poten ti:al of increasing its tOl;lI agricu ltu r:I I production I'aloe from about S99 billiOll to about S2S6 billion by 2030. This he
remarked can be: achieved by gening impro\'ed yi elds, improved variety. fen ilisns and !T1IXhanintion , The CBN fu rther eJlplaincd thai NIRSAL provides the fi nancial fulcrum to Nigeria's nll1ional agric\llIur. al initiati\'es including the National Agricultura l Inl'eStmcnl Plan (NA1P) under the framework or the ECOWAS Agricultu re Programme (ECOWAP) and the Comprehensh'e Africa Programme Agricul ture (CAADP). Accorijing t~ the j)ank.inB\\'al(hdog, lhe agricultural funding is firstly, expected 10 fi x the agric ultural va lue chains. 50 Ihat banks can lend without much lrqIidation 10 performing projects across commercially healthy ag ricultural value chains. II said: ·"The.second is tha t it will encoumge banks to
lend into the agricu llural value cha ins from their balance sh(!C1S :and withou t recourse to go\'cmmc:n l fundi. by offerin g them unprec':dentcd inccntives and technical aSlista nce . The strategie in tent of NLRSAlls to spark agricuhuT1lJ industri· alisation process th roug h incrensed produc ti on and processing of the greater part of the commodities produced in the country to boost ec0nom ic: ea rn ings across the value chain .~ Commenting on the mai n rtaSOfli. why--the-agricukural 5eClor has not pcrfonnc:d in Nigeri a. the CON 1150 ~ued that it was because the sector it has nOl rc:«;"cd c:nough crtdi t from banks, It e:<.plaincd that agricu ltul'C has not receiyed cnough credi t because banks llSSOCiate a8ricullurc wi th high credit risk. and because: they (banks)
lacked the skills to properly
do agric credit. " Banks sc:c: 100 many risks in agriCUlture because: they do not trust Ihe farmer 10 make profil and pay back the loan and the fanner is un3ble to pay back the loan on account of huge challenges ,~ tilt CBN
Pg . 35
said. Outgoing Managing Dircctor and Chief fu,cctLti ve Officcr. Unity Bank Pic, Mr, Falalu Bello. called for the rc· introduc tion of co-opef3tive soc ieties as an avenue to OI1anise farmers and support the progmmme.
"''''''.
But tnc rcgu la\O£ strOngly belie\'es tllat NIRSAL will he lp unlock Nigeria's agri· :;ultuf3J potentials. [I said: "The design or NIRSAL has just been concluded, As a fim step to\''aTds thc rollout of lhe programme:, the stakeholders' C()nfcrcnce will help to c:,(pose the: design to nil stakeholders for e:<. tensh'c discussion "ith a view to .. obtaining their inputs and iUc nti fy thc role.~ 10 relevant stakeholdcrs in the implemcntation of the progmmme:
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Wav Forward "de5ina called on tnc three tien; of government to incre:uc budget and upeodi ure on agriculture . lie lamented the current low IlJoclllion 10 the sector, j"ccording to him , Nigeria )nl y spends th ree per cent of -ler national budget 011 agri. :uhure. "~ I :ala)'S la spends 2S per :enl. and lh~y ~ not just Ioing thaI. they ha,~ been :pending 25 per cent for the 'a st 2S )'C:ars. The African J nion (AU) has a programme
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