The federal government after years of neglect of the agriculture sector beginning from 2010 and 2011, commenced a major reform of the industry. To refocus the sector, the government implemented a new strategy, the Agricultural Transformation Agenda (ATA), and in 2011 up to 2016, the focus was on rebuilding a sector whose relevance had shrunk dramatically.
That was reflected in the lack of lending to farmers by the financial system and the dramatic levels of food imports from across the world, and the intervention, the ATA, served its core purpose of helping refocus Nigeria’s attention on agriculture.
At every stage of the reform, agriculture finance was recognized as critical for producers of all sizes (from smallholder farmers, medium size farmer and larger commercial farms) as well as to properly-functioning input supply markets, processors and traders.
Beyond the access to capital defined as volume and price of capital, a related issue includes competition and it is vital that finance and risk management tools be available from multiple sources (channels), other than the conventional banking system; examples are public capital markets, private equity and other non-bank channels.
However, the current policy efforts to mitigate these issues while partially successful like raising lending from one per cent in 2011 to six per cent in 2015, can do even more. Based on prior discussions between the Central Bank of Nigeria, CBN, the Bankers Committee, federal ministry of agriculture and rural development FMARD and Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending, NIRSAL Plc, a 10 per cent of all formal credit provided should go to agriculture by 2017 – 2018.
Access to insurance contracts also remains a challenge, because while new providers have been licensed by the National Insurance Commission to retail agricultural insurance, the Nigeria Agricultural Insurance Corporation, NAIC remains the dominant supplier. However agricultural insurance penetration remains below three per cent measured by farmers enrolled and cropping area covered, versus 10 per cent target (using India and China as proxies) which would be a reasonable target by 2021.
Government no doubt is mindful of the fact that smallholder farmers are no doubt, critical stakeholders in its economic diversification bid, which is largely anchored on agriculture. They are also instrumental in the realization of the United Nations Sustainable Development Goals (SDGs) to end poverty and hunger.
However, efforts to create an enabling environment for them and other agriculture entrepreneurs have not been successful because a critical challenge remains lack of access to finance, markets and support systems such as infrastructure, skills, information on modern agricultural practices and improved technology along the agriculture value chain.
Considering the huge stake that smallholder farmers have in the production of locally-consumed food, accounting for about 70 per cent of all agricultural produce, agriculture experts have reached a consensus that these farmers can no longer be ignored.
For the long-term development of the agriculture sector and the empowerment of farmers, private sector participation is key because the government cannot provide all the solutions alone. This underlines why agriculture is in the priority list of some well-meaning multinational companies’ corporate social investments. In so doing, they align their agricultural intervention schemes with existing government policies and the United Nations Sustainable Development Goals.
There are notable interventions such like Shell Petroleum Development Company (SDPC), British American Tobacco Nigeria Foundation (BAT Nigeria Foundation), Bill and Melinda Gates Foundation, A.G Leventis, among others.
These organizations work directly with rural communities in Nigeria to provide funding to small-scale agricultural producers and community-based organizations. They also provide capacity building trainings for farmers to educate them on modern agricultural methods, thereby enhancing output and guaranteeing food security and accelerated economic development.
The objective of the corporate social investment of SPDC, for example, is the development of the Niger Delta region through economic empowerment schemes in agriculture and other areas. Among other agriculture-related interventions by the SPDC are the establishment of poultry farms, and agro-processing mills (cassava, oil palm and rice processing mills).
Another impressive and successful model for the empowerment of smallholder farmers is the British American Tobacco Nigeria Foundation agricultural intervention. BAT Nigeria Foundation empowers farmers with skills to adopt good agricultural practices, creates access to finance through the supply of agricultural inputs to smallholder farmers to cultivate a minimum of one hectare of land each and most importantly supports linkage to markets for sales and revenue.
The mandate crops supported by BAT Nigeria Foundation include, cassava, maize, rice and vegetable. Fish farmers are not left behind, they are often empowered through the donation of processing equipment such as smoking kiln to contribute to the fish value chain. Project interventions are done across the six geo-political zones and they have implemented over 180 projects across all 36 States and the federal capital territory.
Project implementation is done at the grassroot level in partnership with the state agriculture development programme, international development agencies and national Non-Governmental agencies (NGOs). The ultimate goal of the Foundation is to empower rural Nigeria for a sustainable future by migrating smallholder farmers from subsistence to commercial farming and by creating agripreneurs of them.
Prior to any community initiative or intervention, BATN Foundation seeks to understand what the challenges are, to create support mechanisms that address their specific needs.
Beyond access to markets, finance, information or skills is the challenge of climate change. Increasingly, the weather has become unpredictable with rainfalls coming during the dry season and vice versa. Smallholder farmers, who typically practice rain-fed agriculture and do not have the requisite scientific knowledge on how to deal with the climate change phenomenon, are the most susceptible to the harsh effects of climate change.
Aware of these challenges posed by climate the Bill & Melinda Gates Foundation, at the One Planet Summit in Paris, on December 12, 2017, pledged $300M over the next three years (2018-2020) to support agricultural research that will help the world’s poorest farmers better adapt to the tough conditions brought about by climate change, including rising temperatures, extreme weather patterns (droughts and floods), diseases, poor soil fertility, and attacks from crop pests.
Also, the Nigeria Metrological Agency (NiMet), who is the official source of all weather information in Nigeria has partnered with agricultural institutions and the private sector to ensure that the right weather information is disseminated to the farmers at the right time.
Interventions in agriculture are not complete without any involvement in the formulation and execution of agricultural policies in the country, especially as they affect smallholder farmers.
Bill and Gates Foundation is strengthening global and national policies that benefit smallholder farmers. Its investments support policymakers, donors, and civil society to identify evidence-based policy priorities, articulate options for cost-effective policy implementation, and drive resources for inclusive agricultural transformation at global, national and local levels.
Similarly, BAT Nigeria Foundation uses its advocacy channels to draw government’s attention to the challenges affecting smallholder farmers and advocates to ensure that government policies and stimulus packages are inclusive of them. One of the platforms on which its advocacy is done is through its bi-annual dialogue session on smallholder farmers and sustainable agriculture.
Given the positive impact which the interventions of few private sector members have had on smallholder farmers as well as other operators in the agriculture value chain, it is envisaged that heightened participation of more members in the sector, especially national and multinational organizations, may be the stimulant required to trigger exponential growth and development of Nigeria’s agricultural sector.