The synergy between the Central Bank of Nigeria (CBN) and the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) in the operation of the Anchor Borrowers Programme (ABP) is delivering good results as a vital component of the Buhari administration’s efforts to rebuild the national economy. The institutional strength and technical capacity that NIRSAL, itself a wholly-owned policy execution tool of the CBN in the agriculture sector, has brought to the scheme has added significant value to the implementation of the program.
Under the innovative and energetic leadership of its MD/CEO, Mr. Aliyu Abdulhameed, NIRSAL has demonstrated that it has the capacity to deliver on the vision of the CBN Governor, Mr. Godwin Emefiele, for a grassroots funding program that can impactfully tackle the financing challenges that smallholder farmers face across the country on a sustainable basis.
The popularity of the ABP illustrates this fact. The nationwide acceptance which the ABP enjoys gives the impression that it has been around much longer than it actually has. In fact, the Anchor Borrowers Programme Guidelines were only released in December 2016. The story of the program formally started about 3 years ago in 2015 when the President, Muhammadu Buhari, flanked by the Central Bank Governor, Mr. Godwin Emefiele, the Kebbi State Governor, and others in the green rice fields of Kebbi, launched the Anchor Borrower Program (ABP). Back then, not many gave it much of a chance to succeed. This was understandable given the history of failed agricultural intervention programs.
Yet, today, ABP, the brainchild of the Mr. Godwin Emefiele who stands out as a central bank governor with a strong developmental mindset is a story of significant progress and impact. The programme which is tackling the financing challenge that smallholder farmers face, now ranks undoubtedly as the signature agricultural scheme of the Buhari administration. It has gained nationwide traction, touched thousands of lives, improved living standards for millions and is contributing significantly to the national economy.
One key reason for the ABP’s success is the massive pool of concessionary funds that the CBN has made available for disbursement to beneficiaries. Recent statistics show that overall, the CBN has impacted 400,000 farmers of Rice, Wheat, Maize, Cotton, Cassava, Poultry, Soy Beans and Groundnut and created 1.2m indirect jobs, according to figures provided by the apex bank in August. Collectively, these farmers are estimated to have, on the back of the ABP, cultivated about 400,000 hectares of land.
Other reasons include the non-requirement of collateral which has expanded financial inclusion to unbanked farmers, the additional project support given to beneficiaries in the form of inputs, training on Good Agricultural Practices (GAP) and provision/facilitation of access to market and other related network linkages.
However, it is noteworthy that like any other project, the ABP has had some structural and operational hitches after its strong start despite the many clear successes and impact.
The CBN has moved swiftly to fix the challenges and strengthen ABP’s institutional foundation in order to sustain its many positives. It is within this context that the apex bank appointed several Participating Financial Institutions (PFI), one of which is NIRSAL.
In this regard, CBN has authorized NIRSAL to bring the full complement of its institutional and strategic capacities to the ABP. This mandate includes: fixing the agricultural value chains in order to provide a reliable platform for de-risking lending to the sector; mobilize financing for agri-business through deploying credit guarantees to reduce defaults; to provide technical assistance in pursuit of these objectives; and to reduce cost of loans for agriculture etc .
At the heart of this mandate is a commitment to ensure that the interests of smallholder farmers are a central priority rather than a fringe concern. The value that NIRSAL brings to the table is demonstrated in many ways but here are just a few.
The first is the scientific mapping of existing and potential ABP beneficiaries via a process known as Know Your Farmer Program using technology to eliminate instances of duplications and potential fraud. NIRSAL has invested substantially in the development of a reliable database of farmers nationwide. The corporation has also conducted comprehensive verification exercises nationwide using technological devices that capture the biometric details of farmers. The process also includes the matching of farmer details with Bank Verification Numbers (BVN) for those who have account numbers and the creation of new ones for those who do not. Statistics show that over 400,000 farmers have had their details captured nationwide in the NIRSAL farmer database, which serves as the pool from where beneficiaries of the program are taken .
This involves three groups: relevant business units of NIRSAL, the corporation’s field staff under its Project Monitoring, Reporting and Remediation Offices (PMROs) and participating banks. To enable this, the corporation has purchased several high-tech data capture machines.
The second improvement is that NIRSAL has also used advancements in aerial technologies to map farmer cooperatives to their farmlands in an innovative redefinition of the concept of cooperatives called “geo-cooperatives”. In other words, the coordinates of the farmlands are linked to members of the cooperatives. The introduction of this feature to the operations of the ABP has also helped to reduce the likelihood of fake cooperatives with no real land to farm from accessing the scheme.
The results have so far been positive. NIRSAL has created over 250,000 direct and above 1.25 million indirect jobs across the country. In addition, NIRSAL has so far facilitated highly affordable, single-digit interest rate finance of about NGN5.7billion to over 33,000 farmers for the wet and dry seasons of 2017 and early 2018. Because of NIRSAL’s robust risk management framework, the loan performance rate has improved, and the likelihood of default by beneficiaries significantly curbed.
Leveraging the strong support of the CBN, especially the personal commitment of the Central Bank Governor, Mr. Godwin Emefiele to the success of the ABP, NIRSAL has successfully integrated the key components of the ABP into its mainstream operations and this has rubbed off positively on the program. This development is good for the sustenance and continued impact of the ABP. Thus, the brilliantly conceived program is proving great value as a tool for empowering smallholder farmers nationwide.
–Oche is a public policy analyst
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