The new Nigeria Agricultural Promotion Policy (APP) also known as the Green Alternative unfolded by the Federal Ministry of Agriculture and Rural Development may yet be the solution to several socio-economic challenges facing the country if effectively implemented. There are calls both within and outside Africa, that in order to guarantee food security and massive employment, public and private funding for agriculture must increase.
Nigeria, for instance, was a strong agricultural produce exporting country prior to the oil boom era, with very strong export volumes and value in produce like cocoa, cotton, groundnuts, palm kernel and rubber. The first palm kernel seed planted in Malaysia was taken from Nigeria, and that country today is one of the world’s largest exporters of palm oil thanks to enhanced agricultural financing.
Public and private investors initiating projects focused on commodities and grains with strong export potentials, such as cotton, cocoa, sesame seeds or foreign exchange conservation potentials, like rice, wheat and soya beans must be sustained. The Central Bank of Nigeria (CBN) intervention fund initiatives should be refocused in these regards as well.
Another major reason for the high level of subsistence farming practiced in the country is largely attributable to education and this has begun to change with the entrance of a new generation of farmers into the sector, which has brought new ways of doing things. In the same vein, the new out grower Schemes have made it possible for a good number of subsistence farmers to acquire the requisite knowledge and skills that can make them break out of this level of operation.
The scheme has also contributed immensely to the development of agriculture in Nigeria, with a lot of projects being initiated and supported across the agriculture value chain, most especially core manufacturing, processing, poultry and in more recent times, production with strong backward integration initiatives being driven by organisations like Dangote and Erisco.
In addition to the above, other initiatives focused on Small Holder farmers include the recently launched Anchor Borrowers Programme with a structure that not only provides financing but also creates market and input opportunities for small-scale farmers. The same will provide a launching-pad for the Federal Government’s Economic Diversification Programme. These measures collectively should shortly increase the contribution of agriculture to the nation’s GDP.
The availability of single digit interest on facilities would provide immense relief and great opportunities for micro, small and medium-sized manufacturers. This will enable them to not only remain competitive in cost of production versus product pricing against imported brands, but also be profitable for the banks due to less attrition as a result of non-performing loans in most cases.
Commercial banks must be encouraged to brave the risks associated with loans to the agricultural sector. Towards this end, the Agricultural Credit Guarantee Scheme (ACGS) and the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) should be repositioned and restructured to play this role. The Nigeria Deposit Insurance Corporation (NDIC) should also draw up instruments to support agriculture-friendly finance institutions.
Nigeria also needs to network with the Alliance for a Green Revolution in Africa (AGRA), a continental initiative to create an innovative fund for Africa’s smallholder farmers. This project produced the out grower scheme which the CBN further modified and launched as Anchor Borrowers Programme. The basic principle of the out grower Scheme is to match smallholder farmers with off-takers, service providers and input providers. This concept helps to create markets for the production output of the small farmers as well as provide them the necessary technical support to achieve better production yield. The Federal Government must pull all stops to change the face of agribusiness and the fortunes of Nigeria.