Agriculture has been projected as one of the major driving forces of Africa’s economic resurgence, complemented by a growing interest in the continent’s natural resources.
Over 60 per cent of the world’s available and unexploited cropland is located in sub-Saharan Africa, and in Nigeria, agriculture contributes about 22 per cent of its gross domestic product (GDP) and over 90 per cent of employment.
Unfortunately, about 90 per cent of the agricultural output is accounted for by small- scale farmers with less than two hectares under cropping, a situation that presents huge gaps that can be exploited for good and possibly put an end to the era of treating agriculture as a development programme, rather than a business venture.
Currently, ActionAid Nigeria (AAN) is implementing Phase 3 of the Public Financing of Agriculture (PFA) project. The project is designed to catalyse increased quantity and improved quality of public investment in agriculture through enhanced citizens’ participation in policy making process to increase the productivity and well-being of women smallholder farmers, their households and communities in Nigeria.
The project also seeks to continue to strengthen smallholder women farmers’ platforms through addressing the challenges of low voice and participation of smallholder women farmers in agricultural policy making processes at local, state and national levels.
Issues of specific focus within the project includes that of poor access and control over land and low spending on agriculture by the government at all levels, and little support to smallholder women farmers by government, lack of access to agricultural credit/finance, business development/advisory services and market access, inputs, technology, crop insurance, etc.
One of the deliverables of the PFA Phase 3 project is the simplification of the Agriculture Promotion Policy (APP) for smallholder women farmers in line with the Comprehensive African Agricultural Development Programme (CAADP) Framework in order to further empower their organisations to be able to hold duty-bearers to account towards increasing the quantity and quality of agriculture expenditure within the Nigerian government’s Agriculture Promotion Policy (APP) and the agriculture components of the Economic Recovery Growth Plan (ERGP). Therefore, the Food and Agriculture Team of ActionAid Nigeria intends to commission a Technical Editor to summarise the APP.
With the economy having only recently recovered from a forced recession, brought on it by situations not entirely under its control, such as volatile oil prices, which dented government revenue and consequently its spending, it has become imperative to build a self-sustaining economy.
The consensus across board is that there is no better time than now to leverage the potential of the agriculture sector to help diversify the economy and place it on the path of sustainable growth and development. Thankfully, in its Economic Recovery and Growth Plan, government had identified agriculture as a key plank of its diversification agenda.
The ban on importation of goods which can be produced locally is one step the current government has taken in demonstration of the renewed focus on agricultural development to ensure diversification of the country’s revenue source away from oil.
Minister of Agriculture and Rural Development, Chief Audu Ogbeh, while speaking at the inauguration of the Technical Working Group of Agricultural Roadmap in 2016 had emphasized that the decline in global oil prices had made it imperative for the country to diversify the economy, with agriculture as a major anchor.
“We have to diversify and that diversification holds a lot of promise through agriculture,” Ogbeh stated.
A factor bedeviling the industry is the lack of access to finance, a major impediment that prevents farmers from investing in basic inputs, such as good seeds, fertilisers and small-scale irrigation needed to raise productivity and generate sustainable income. As a result, yields have not increased significantly, leading to pervasive hunger and poverty.
Similarly, with little or no commercial financing and other incentives available to entrepreneurs seeking to build businesses that could boost food production, agricultural production remains at a subsistence level.
“Regarding agriculture, the opportunity is immense,” said Jerry Gushop, head of agricultural banking at Stanbic IBTC Bank. “Though much is required, and a collective inertia still remains, there are increasing signs of how agricultural transformation can change the country’s fortunes.
“The current economic situation, especially with strong government backing, makes agriculture an attractive prospect for the country. Note also that the demand for upstream products linked to the broader agri-business sector will blossom, creating new economic opportunities for a wide range of local and international enterprises,” he added.
Hitherto, the various governments and the Central Bank of Nigeria had introduced financing initiatives to encourage local banks to finance agriculture and also help to reduce the cost of finance for investors/ entrepreneurs in the sector. Some of these initiatives include the Nigeria Incentive-Based Risk Sharing Model for Agricultural Financing (NIRSAL), an initiative that provides guarantee on exposure to the financing institution while also providing interest rate rebate for the borrower.
The other is the Commercial Agriculture Credit Scheme (CACS), a CBN initiative that provides single digit financing through commercial banks at 9 per cent annually for commercial farmers. The Real Sector Support Fund (RSSF), also a CBN initiative which provides single digit financing to the real sector, including the Agric sector, for periods of up to 15 years at 9 per cent per annum interest rate.
The Anchor Borrowers Programme, another CBN initiative, provides financing at nine per cent per annum interest rate. The scheme was recently established to cater for smallholder farmers via an ‘anchor’ platform, by creating markets/offtake for the smallholder farmers.
It was largely in search of ideas and strategies to unlock the sector and stimulate growth of local production that many fora focused on agriculture have become commonplace.
The ultimate goal is to unlock the country’s economic potential. Most of these fora usually reach the consensus that the requirements of Nigeria’s economic renaissance include the adoption of innovative strategies, appropriate policy directions and inclusiveness, and meticulous implementation.
Deploying the clout and resources of government to bear on such initiatives and projects must be prioritised, forging collaborations with the private sector to drive growth of the agriculture sector.
In addition, agribusiness should be broad-based, including mentoring the youth to see the attractive prospects in practising agriculture. Agriculture should be practised as a business, and have private sector participation across the value chain, which will enhance the drive towards restoring Nigeria’s place as a leading agricultural economy.
“The quest to unlock Nigeria’s agricultural sector, given its massive transformative potential, continues to gain interest and momentum from within Nigeria and abroad,” said Gushop.
He noted that developments in the agriculture sector have also helped towards increasing the volume of exports from Nigeria to other parts of the world. Some of the notable export products are sesame seeds and shea butter.
To move forward, experts said Nigeria must look inward for local financing solutions. Several local banks have become quite active in the agric space, providing both financing and other support to the industry.
For instance, a few years ago, Stanbic IBTC Bank collaborated with Tata Africa Services and John Deere Financial, a division of United States-based John Deere, through which the bank is providing a range of financial services to customers of John Deere.
With better governance and policies in place, Nigeria would reap the economic benefits of having a greater proportion of the population in the economically active sector. The large share of agriculture in Nigeria’s GDP, according to experts, suggests that a strong growth in agriculture is necessary to trigger overall economic revival and growth.