Stakeholders propose N2.5 trillion investment to boost agriculture

Stakeholders in the commodity and exchange market have said that Nigeria’s agricultural sector requires an investment of up to N2.5trillion, for the country is to grow its food production to feed its teeming population.

This, they said, is the reality of Nigeria’s rapidly growing population, which is projected to be the world’s third most populous country by 2050.

Country Manager, AFEX Commodities Exchange Limited, Ayodeji Balogun, while speaking during the signing of a Memorandum of Understanding (MoU) with FMDQ Group, yesterday, in Abuja, explained that the figure was based on its own research, which showed a huge funding gap in the sector. 

He said current lending by commercial banks to the agriculture sector is about N500billion or 4.5 percent of the total industry lending, adding that

However, Balogun opined that “it is one thing to hit the investment, but it’s even more important this investment is not just scaled to financing a side of the market, probably the processing and export side, and leaving out the production. It is primarily important that this funding is available to the entire market as a whole from production to processing to export.

“On the other side is to also create innovative products that leverage technology finance, and also build on fundamentals of good agricultural practice to ensure that these loans are healthy and high-risk loans.”

He identified ‘three baskets’ of core areas must be addressed to increase farmers’ productivity, including, identification of farmers for financial encoding; education, to make them see agriculture as a business; and increasing farmers’ access to liquidity.

“We have seen that farmers are able to increase their wealth by 400% over three to four years by just being able to access these bundles and the approach that we use in the last five years,” he added.

Continuing, he said: “The other part of the equation is that you need to unlock wholesale and retail investment in terms of loans and financing for the player. So you need to solve the farmers’ productivity at one end, and you need to show innovative products on low financing. We have what we call ‘the input note’, which puts farmers with similar geography, similar culture and credit history, into a pack. We issue a debt instrument against this that is accessible to both institutional and retail investors to invest in, which is in addition to micro-financing and commercial financing and other interventions by the federal government.

On his part, Chief Executive Officer, FMDQ Group, Bola Onadele, expressed delight over the partnership with AFEX Nigeria, saying: “as members of the SEC’s Implementation Committee on Commodities Trading Ecosystem, our goal at FMDQ is to support the growth of the Nigerian agricultural commodities trading ecosystem through commercial and market-driven propositions.
“Through the partnership, we will be introducing new products aimed at de-risking the value chain, attracting capital market funding and diversifying the existing products available to investors in this space.

“The collaboration is how to bring agriculture and capital together. We need to build the dead capital market to ensure that monies from the pension industry, the banking industry will flow to the agricultural side to support supply and support demand. We believe this collaboration will help us to do a lot more. The Central Bank will join this collaboration is some way, and energise AFEX to be that leading commodity exchange in Africa.”