- Scheme not impacting positively on farmers – Analysts
A total of N852.15million has been guaranteed to 5,454 farmers, under the Agricultural Credit Guarantee Scheme.
The Central Bank of Nigeria, in its economic report for the fourth quarter of 2018, showed that this amount represented a decrease of 40.1 per cent and 5.9 per cent below the levels in the preceding quarter and the corresponding period of 2017.
The loan guarantee scheme is a public-private sector initiative set up to transform the country’s agricultural sector.
It was initiated by the apex bank, the Bankers’ Committee and the Federal Ministry of Agriculture and Rural Development, to guarantee 75 per cent of loans provided by Deposit Money Banks to farmers, as part of efforts to transform the country’s agricultural sector.
Sub-sectoral analysis
Sub-sectoral analysis showed that food crops got the largest share, amounting to N369.54 million (43.4per cent), guaranteed to 2,373 beneficiaries; followed by mixed crop sub-sector, which received N162.75 million (19.1per cent), guaranteed to 1,710 beneficiaries. A total of N138.44 million (16.2per cent) was guaranteed to livestock sub-sector in favour of 564 beneficiaries; while cash crop, fisheries and “other” sub-sectors got N105.28 million (12.4 per cent); N58.82 million (6.9 per cent); and N17.32 million (2.0per cent), guaranteed to 542; 175; and 90 beneficiaries, respectively.
Analysis by state showed that 30 states and the Federal Capital Territory benefited from the scheme, with the highest and lowest sums of N95.83million (11.3 per cent) and N1.99 million (0.2 per cent), guaranteed to Ogun and Bayelsa states, respectively.
Commercial Agricultural Credit Scheme
However, as at November 2018, the total amount released by the CBN under the Commercial Agriculture Credit Scheme, from inception, to the participating banks for disbursement stood at N596.44billion for 576 projects. Of the total number of projects, 34 were in respect of state governments.
An economist, Mr. Joshua Adekoya, however, said the scheme had not impacted positively on farmers, stressing that a better living for farmers could only come through good governance.
“I believe the recent intervention through NIRSAL, which is part of the CBN intervention, has been bolder and better targeted. It is difficult to say the same has happened over the years. The CBN should ensure that its interventions reach the smallholders, who are in a worse situation,” he said.
According to him, a journey around the hinterland and villages will show that poverty among farmers is higher.
“A better living for farmers can only come through good governance,” he said.
The National Bureau of Statistics has said that the agricultural sector grew by 2.46 per cent in Q4 2018, from 1.91 per cent in Q3 2018 and 4.23 per cent in Q4 2017.
In a recent development, the CBN disclosed plans to increase its credit guarantee to small-scale farmers through its Agricultural Credit Guarantee Scheme Fund.
The Chairman, ACGEF, Mrs. Olubunmi Siyanbola, who spoke with financial journalists, in Lagos, said the scheme, which offered credit guarantee for risks by giving loans to small farmers, presently at N100, 000, was too low, saying that there was the need to review the intervention upward.
Siyanbola said there “is a crucial need for us to do all that it takes to take care of those that actually contribute to the growth of the agricultural sector towards its huge contribution to economic development, and these are the peasant farmers.” “It is also very important for us to enable them to access finance so that they could do more to ensure food stability in the country,” she added.
According to her, the Fund has been in existence for 40 years and continues to gain attention as evidenced by the increasing ongoing debate over its relevance due to the declining traction among banks.
She explained, “More importantly, there have been attempts to review the main contextual issues in the operability of the fund in the 21st century, but these attempts have been delayed by the non-constitution of the board until 2018, since its dissolution in 2007, by the Federal Government.
“For instance, the maximum loan amount guaranteed under the Fund for the different categories of farmers, that is, individual, corporate bodies and cooperative societies, respectively, has lost value, due to the rising costs of goods and services, coupled with the dynamics of the macroeconomic situation of the economy.”
She said that the Fund had helped in some ways in tackling the scourge of financial access among agro-preneurs in Nigeria, adding that the challenges, however, suggested that a lot more work needs to be done to reposition the Fund in the right pedestal for agricultural development.
“The focus of the present government is to reposition the country to diversify it from its reliability on oil to non-oil, and you have seen the impact of that till date,” she added.
Participating banks
The CBN’s statistics showed that as at the end of the fourth quarter of last year, N596.44billion was disbursed for the projects through 20 Deposit Money Banks.
An analysis of the figure showed that the highest amount of N122.16 billion was disbursed through Zenith Bank Plc to finance 76 agriculture projects.
This was followed by United Bank for Africa Plc, with N83.06 billion for 51 projects; while Sterling Bank Plc, First Bank of Nigeria Plc, and GTBank Plc had N72.17 billion, N50.49 billion and N39.85 billion for 42, 100 and 29 agricultural projects, respectively.
Similarly, the sum of N36.66billion was channeled through Access Bank for 26 projects; Keystone, N30.05 billion for 22 projects; Union Bank, N28.91 billion for 39 projects; Stanbic Bank, N27.66 billion for 45 projects; and Unity Bank, N25.18billion for 27 projects.
In the same vein, the sum of N21.67billion was disbursed for 17 projects through Fidelity Bank, while FCMB, Skye Bank, Heritage Bank had N18.53 billion, N13.77 billion and N6.82 billion for 28, 14 and 10 projects, respectively.
Benefits
The apex bank established the CACS in collaboration with the Federal Ministry of Agriculture and Water Resources in 2009. The scheme is a sub-component of the Federal Government of Nigeria’s Commercial Agriculture Development Programme and was financed from the proceeds of the N200billion 7-year bond, raised by the Debt Management Office.
The fund is made available to participating banks to finance commercial agricultural enterprises at a maximum interest rate of nine per cent. The fund was set up to fast-track the development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate.
It was also aimed at enhancing national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
