THlSDAY, Vol 16, No. 5833, Page 35
Wednesday, Apri l 13, 2011
Business WORLD
analysis
Bankers Provide Recipe for Agric Sector Development
T
he s tructural imbalance of the Nigerian economy has over the years, remained a so urce of concem to gO\'+ emmem. stakeholders and inveslOrs (bOlh local and foreign) in the country. The advent of oil in the early 1970s which tompletely skewed govemmenl's focus and made the Nigeria economy highly dependent on oit revenue, has adversely affected Ihe perfonnance of the agricultural seclOr over the years. That is why there has beeQ a consistcnt c-.u l for thc d iversification of the ttanomy to make il become productive once more Thcrefore, the dismal perfonnance of the agricultural sector in tenns of ils C,ontribution to Nigeria's yearly total re\'enue in the last four decades prompted the Nigerian Bankers ' Commi ttee 10 ini tiate a fomlula aimed at reposi tioning the agricultural production in the country. The bankers consequentl y held a retreat on the Nigerian Incenti ve- Based Risk Sharing Agricul tur.!.l Lending (NmSAL), an idea which is been proposed to dri ve agricu ltur.u revo lut IOn in the country. N IR5AL, which is expected to replace the present agricu ltural framework in the country, the bankers llr&ued is a model of financi ng agricu lture differentl }' from the current model which has not }'ielded the desired impact of making adequa te cred it available fo the sa:tor.
Th e J ou nl cy So far A repon by the Alliance for a Green Revolution in Africa (AGRA), founded b}' a fonner Secretary General of the Uni ted Nations, Mr. Kofi Annan, showed th at Agriculture accou ntS for roughly 41 per cent of Gross DQrncslic Product '( GDP) in Nigeria and 50 per cent of Iheeronomicall}' active population in Ihe country. Figures revealed by thl! Tepan showed that if th e Nigerian governmen t is si ncere in its povcny reiluction campaign, it absolutely has to fix agriculture. It also s howed that the COUnt ry has 70 per l:Cnt of its population ri g ht I}' in nlra] arl!3.S and about 70 percent also li ving in less than one dollar a day. 1t attributed the 70 per cent populalion figull:. still Jiving on one dollar a day to Ihe foct thm the nat ion was yet to revive its agricultural secwr. It stated that si nce 2000. agriculture has been the slo:west growing sector, growing rough l}' at about 5. 1 per l'eIiL per annum. According 10 the Vice President for Policy and Partnerships , AGRA, Dr. Akin Adesina. agricult ull:. devel opment has to be encouraged in Nigeria so as to transfonn the economy. generate job s and equitable growth . It said that the countl)' has beoome a net importer of food. showing that it spends about 54.2 billion a year imponing food items such as wheat, fi s h rice, sugar and a whole lot of others. Adesina added: " When you look ill the history of the agricultull:. ~ect o r. in the 60s, we used to have the groundnUl pyramid: we used to have palm oil, cocoa among others. Nigeria was known as an agricu ltural basket, no t only in the country. but glObally. Today, we have los t all th at. 50 ,w e are actually importing inflillion because as g lobal I.um modity prices are ri s ing. we are imponing food and by that we are driving inflation in Ihe a')Ulltry." NIKSAL 10 th e R('Scue N 1R SAL is a demand dri\'en credi t fac ility which IS different from the currenL supply driven funding . h s approach is such that it would adopt a value- chain to lending and banks wou ld be free . to choose which pan o f th e ,chain they would be inte~ted in lendi ng. It woulJ build the ca pacity of banks to engage and delive r loans by providing technical assistano::.. reduce counterpart ris ks facing banks th ro ugh innovath'e crop ins urance prodUCIS. reward performance in agricultural IClldi ng and wou ld be managed with perfoml3l1Ce based incentives. NTR5AL would pool th e curren t resources in the: Central Bank of Nigeria's (C BN) agricultural financing schemes and other i ny~to r funds and trans fer these into the different componen ts of the progr.unme. In other words, the apex bank wou ld intcgrate its existing agricultural fimmcing and ins urance scheme intu NIR5AL. C ON's Viewp oint To the CBN Govc:mo r. ''''Iallanl Sallusi Lamido Sanusi, there is disconnect between financial intemlediaries and the real econom}' in Nigeria. According to Sanusi , savings
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price and Nigeria which was the cocoa bas ket of the world cannot take advantage of that! And Ghana is making mIllions. We produce crude oil. but we impon pctroleum product . we have gas, but we are imponing fenilize~, ....·c have cassava, but we are impon ing st arch , we have COllon . but we are. importing textile! It is not going 10 (onunue, ~use in 10 y~ t ime we wou ld not have an economy.
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By ObillllU Chima in the ttO nomy thOl an:. rai sed in t.he banking system are s upposed to be channelled to thc real economy where income would be created ins tead of wealth re-distributing. The regu lato r added: '"The report on NIRSAl lays the fou nd mion for a radical change in th e balance s hee t of banks and hopc:full y. cmalyses s tructural adjusune nt in the N igerian ·economy. We are nOl looking for OJ mag ic that would trrulsfonn the economy ovemil:\hl. Thi s is a long ternl projcct. "What we have Started. we probabl}' would not be h..:re when the final resu lt would s Ian manifes tin g. I don 't arty of us would be here in the next 10 to 20 years. BUI CIt some point in th e history of an y CO Untry: M aluys ia, Indonesia, China, Br.tLi1. a group of national ist sat down and said they want to start somewhere and make their country different." San usi who ex pressed disnppainlment o\'er the con!ribm io ns of the agriculture smor to the generdl performance of the econom y. revenled that agricult ure productio n has remained where it was in 1960. "All Lhe intn:ase we ha\'e had in ::.gricultural production year-on-}'ear, have come from two things: increased factor intensity and also good ..... eather. We have bc.::n tryin g to see whal can be ach ieved . Wo! have gOllen like s ix val ue chains and we may select two or thrO! and see how we can fix those value chains . "We intend 10 do a few o f them by actually laking them as project and over th e next two 10 three years, show what you can do with cassava, or tomalO or maize. if you have al l of Ihese in place. That sets th e t..:mplate for thc transfonnalion of the indus try. But if you an:. doing tomatO, somebody has [0 fix power. Imnspon ation through th e farm and OUI of Ihe fanll. "And for the <Iucs tion of Research and Development, there shou ld be a research insli tute that would produce high quality seeds and would have to be IDI allach ment to that value chai n . You have got to talk about availab ility of fertil izer, technical assis tance: to Ihe farm er. training in the bIDlk to understand the risk. market assess." the CBN Governor insi"sted. He urged government 10 take a decis ive ac ti on o n fenil izer production in th e co unt ry, add ing th31 Ihe banking watchdog has a role to drag stakeholders 10 the table to ensure the success of Ihe programme. Sanusi who wore a g loomy look decl~: "Toda},. we have a probl em in Ivory Coast, cocoa is at ils highes t
"There nll/st be concentrated investments in key areas and ~ve are recommending for Nigeria to have What is called Stab le Crop Import Substitution Zone, It is basically the flipside of an export processing zone. In these areas, we should concentrate on investments in injrastructure,Research and Development" L.. ___ ••••••••• __ ._ •___ • ______ •• _____ .. __ • ___ •• • •• •••••.• • •. _._ ... . .. _........ ... __ ••••••
Wa y Forward Adesina, who acknowledged thm there are huge opportunities in agriculture production III the co unLry, in tenns o f potentialS, empha;; ised that (he issue has gone beyond poten tial s. The AGRA official stated: "You cannot eat potentialS , yo u have to lranifonn th e polentials into actual food, to show th at we can feed ourselves; we can add value, a.:pon and be a global player in the food market . In the g lobal food markel . it is not just about producing commodi t)', II uclUal ly has to do with tmnsfonning those raw commodities into products by value-adding . And that is where v, e need to play and play big . "Nigeria's agriculture is act ual ly under pecfomling in tcnns of productivi ty. It is 121 per cenl b(:low the world average in Lenns of cereal yield . So when we talk about transfonnation o f the agriCU ltu re sector, we must gel technical chan ge and r.l.ise: pru!jUl:tivity of agriculture. We have fO unders tand thm we have to ge t back our position in the g lobal m arke:t." Adesi na who urged the three tiers of government to increase budget and expenditure o n agriCU lture, bemoaned the current low allocati o n to the secto r_ According to him . Nigeria on ly spends th ree per celli of her nat ional budget on ag ri culture. "~ I ala}'sia spends 25 per cent, and thc)' are nOl just doing that , they h,IVe been spending 25 p..:r Cl:nt for the last 25 years. The African Union (AU) has a progrJrnme called th e Comprehensi\c African AgricultUral [)evclllpment P rogramme where govemmenls have 10 commit at least 10 per cent of their budget into agriculture. "Niger. Mali . T3lIl.an ia. Kenya have all exceeded th is targe:t. Eve n if we do thm. there is anot h..:r question of the qualit}' o f expenditure itsc:lf. We are spending most of our money in subs id y. we are not investing in infrastructure. and we are not investi ng in iniguLion, or Research and Develo pment. So it not j ust about raising the expenditure for agricul ture, it has to do wit h the quality o f inves tment ." Adeshina noted . He stressed that th e count ry has th e poten tial of increasing its IOtal agricultural production value from Ilbout $99 billion to about $256 billion by 2030. Thi s he remarked call be achieved by getti ng improved y ields , improved varie ty, feniliu:rs and mechamsation. The bankers commi tt ee also said th at ;t is working closely with the Abuja Commodity Exc hange to work on modaliti es for the: marketi ng of the products so as to ensure that the objective of the progfllmme is achieved . Chairman S ub-Committee on E<..unom ic Dc:1'elopmcnL of the tiankers' Comm inee and Group Managing Director of Access Bank Pi c, Mr. Aigboje Aig-Imokhuc:de, said that the objective of the retrc:i1 was to detennine ways 01 improving the Nigeri311 agn cultural sector ~ll anaging Di rector and Chief Execu tive 'Officer, Unit}' Bank Pic. M r. Falalu Bell o, there is a neci:l to revive cooper,t1i ve societi es as an avenue 10 organise fanners and suppon the programme . According Bello, hi storically, we have had very successful co-operative societies in the co untry. "For me, there are fundamentallhings that we have gOIten wrong in the Nigerian economy. We h(we abandoned agricu ltu ral s uppon programmes thai we have had in the 60s. We mus t have conscious policy \0 support agriculture. Basicall}" we need 10 go back to organis ing co-opcralive society as a means to mobilise farm ers." Be ll o averred . Commenting funher, Adesina also adv ised th e Federal Govemment 10 suppan pri vilte enterprises in food pro· cessing; adding th::II what was needed was to fix a number of po licy iss ues such as li ber.tli~ ing the fo und:i1ion seed production . According to him , the way in which agric grew in other partS of the world was throu gh focused investment in a particular bread basket area and nOL jusl spenuing money every where. "There must be concentfllto::d In\'CSl mcnts in kcy aro::as and we are recommending for Nigeria to have what is called S table Cro p lmpon Substi tution Zo ne. It is basically the flips ide of an e'Ul,on process ing zone. In these an:as. we should concentrate on illl ~l m ent S in infras trUl:ture and Rese.1ITh and Dc:velopmenl. ··And those areas should be d'l~bled by particular poliCICS such as lax ho i ida}' for Companies that are loc-med in areas of prod uct io n. All these :u-e needed for ag ri cul!ure to become competiti ve once mort." he advised . On his pan, the CBN Governor said: "Assessing finano: is a crit ical element. But we would work on the value chai n . Our job is to stan. This is somethin g that was done with the central bank agrie loan . So i think the res ult is much more useful than Ihe v ios ion ."