Friday, November 8, 2013


Credit facilities to finance agriculture is a vital incentive farmers need from governments. Anywhere farming is taken as a business, it needs adequate funding to thrive, boost production and sustain income.

Funding for agriculture is yet to make meaningful impact on Nigerian farmers and the country’s economy. It is yet to be strongly embraced or facilitated by the private sector—especially commercial banks—and international agencies as the World Bank, International Fund for Agricultural Development, and other development partners.

Private sector support through agriculture loans and grants is growing in Kenya, even more in US, UK, China, Brazil and Malaysia to keep farmers in business.

But in Nigeria, analysts see unending trouble in agricultural financing after loans approved for farmers over the years by successive administrations failed to meet the yearning of farmers.
At the recent Nigerian Economic Summit in Abuja, women like Yemisi Iranloye, a cassava farmer, lamented the stringent conditions that make agricultural loans inaccessible to farmers, while urging for very low interest loans to rural farmers especially.

Agriculture minister Akinwumi Adesina, has maintained since taking office that all agriculture value chains, including agricultural finance, will be turned around as the sector is now being treated as a business, not a development issue.

When former President Olusegun Obasanjo approved N50 billion for agriculture, farmers jubilated across the country with no knowledge that the money was unavailable.
Investigations later revealed the 25 banks consolidated during the tenure of Central Bank governor Chukwuma Soludo were directed to earmark N2 billion for lending to agriculture in attempt to make them embrace agricultural financing.

But the directive met stiff resistance when most banks in their business wisdom decided to have nothing to do with giving loans to farmers—because agriculture is tagged as high risk business from which they may not recover their money.
The unanswered question on the lips of farmers all over the country then was: “Where is the money?” Many analysts and stakeholders as at that time berated the government, saying that the policy was deceptive.

Government’s approval of agricultural loans did not end with the exit of President Obasanjo.
Last year, President Goodluck Jonathan disclosed that a bond of N200 billion has been floated for farmers to access. Even recently, during the 19th Nigerian Economic Summit in Abuja, the Vice President, Namadi Sambo, announced a grant of N15 billion approved for farmers through the Bank of Agriculture (BOA), for the 2013 farming season.

The irony: the grant comes three months to the year end, when some crops have already been harvested.
Despite these federal interventions, farmers indicate they are not accessing the facilities. Where then does the problem lie?
Many analysts and stakeholders blame government insincerity. Others finger commercial banks shying away from funding agriculture; some more blame illiteracy of peasant farmers, which puts political farmers in vantage position to hijack loans.

Lending to agriculture by commercial banks has been reportedly lower than in other sectors. A need for improvement prompted CBN Governor Sanusi Lamido Sanusi to introduce revolutionary Nigerian Incentive-Based Risk Sharing System for Agricultural Lending, NIRSAL, to encourage the banks to lend to agriculture with confidence at low cost.

Under current arrangement, risks and costs of loans given to farmers are shared by the CBN and commercial banks in case of default, but few banks have some commitment to agricultural lending.
National Planning minister Shamsudeen Usman believes there must be a softer loan to push even faster development of agriculture sector. Speaking at the 19th Nigerian Economic Summit in Abuja, he said attention must be paid to the banking sector on issues relating to agriculture.

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