Monday, August 09,
2021 / 12:37 PM / by CSL Research / Header Image
Credit: Inara Foundation
Amidst the growing insecurity in the country, farmers have called on the Federal Government to intercede on their behalf to the Central Bank of Nigeria (CBN) to extend the loan repayment period for the Anchors Borrowers' Programme (ABP). This plea is coming barely two months after the apex bank mandated the concerned farmers in June 2021 to repay their loans to allow other farmers to take advantage of the scheme, which is aimed at boosting food production across the country. The CBN in recent years has played an active role in stimulating growth in the agricultural sector. The ABP is a major platform designed to achieve this aim with N756.5bn loans disbursed to over 3.7m farmers under the programme.
In November 2015, the CBN, in partnership with the Presidency, launched the Anchors Borrowers Programme (ABP) to create a linkage between anchor companies who specialize in processing agricultural commodities and smallholder farmers in the country. This led to the disbursement of loans for farm inputs to many smallholder farmers through financial institutions within the country (DMBs, DFIs & MFBs). While financial institutions got loans from the CBN at 2.0%, Farmers got the loans at an interest rate of 9.0%. Despite this initiative and many others by the CBN, however, the agriculture sector has seen no real significant growth. Since the inception of the ABP in 2015, the agriculture sector has grown by an average of 3.8% between 2015 and 2020 which is lower compared to the prior 5 years (2010 -2014) and 10 years (2005 - 2014), when the sector grew by an average of 4.5% and 5.7% respectively.
The farmers, on their part, argue that the spate of insecurity in the country has continued to undermine output, as many farmers cannot go to their farms for fear of being attacked or kidnapped. In addition, the lack of storage & agro-processing facilities and decrepit road infrastructure hampers the route-to-market strategy, which also contributes to post-harvest losses. That said, some of these farmers see the loans as free money or probably their share of the national cake, and many leaders of several farmers' associations who handle the distribution of the loans have diverted the funds for their personal use.
In our view, the CBN may need to employ alternative methods to carry out the program with examples drawn from similar private projects executed by agro-partnership firms in the country. Furthermore, we are of the opinion that the programme should come under the supervision of the Ministry of Agriculture who may be better able to deal with the farmers.