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Despite huge loans disbursement, food crisis bites harder

By Gbenga Akinfenwa
18 July 2021   |   1:33 am
The current administration has disbursed more loans, credit facilities and other interventions into the agric sector, compared to past administrations, going by the reports of the Federal Government. Though there is no specific figure on what has been released so far, but in spite of this, the country is facing the worst food crisis in…

The current administration has disbursed more loans, credit facilities and other interventions into the agric sector, compared to past administrations, going by the reports of the Federal Government.

Though there is no specific figure on what has been released so far, but in spite of this, the country is facing the worst food crisis in recent times as food prices soar while many Nigerians are suffering from perpetual hunger.

Last month, the House of Representatives decided to investigate the disbursement of loans and credit facilities by the Federal Government in the agriculture sector since 2009.

The period under reviews cover the administrations of the late Umaru Yar’Adua and Goodluck Jonathan, as well as the present regime of President Muhammadu Buhari.

The resolution was sequel to the unanimous adoption of a motion moved by Chike Okafor at the plenary. Okafor said from 2009 to date, the Federal Government had approved the disbursement of funds to farmers in various schemes to the tune of over N275b, ranging from Commercial Agricultural Credit Scheme to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), to help farmers improve agricultural production and guarantee food security.

The lawmaker also noted that apart from increasing food supply, the schemes were to grant agricultural loans to large and small-scale commercial farmers to lower the prices of agricultural produce, generate employment and increase foreign exchange earnings.

The food inflation in the country has seen food prices rise to double-digit figures while Nigerians earn less income. Last February, Nigeria’s food inflation rate surged to 21.79 per cent — the highest rate recorded in the country since October 2005 — exactly 15 years and four months ago. Since then, the inflation rate has been galloping.

Despite the fall of the inflation for the second time in May, dropping from 18.12 per cent reported in April to 17.93 per cent, according to the Consumer Price Index (CPI) released by the National Bureau of Statistics (NBS), prices of food and consumer goods have continued to soar in the face of disposable incomes that have already been weakened.

For now, 50kg bag of rice (premium Local) which sold for N18, 000 is now N21, 000; a paint bucket of Garri, that went for N300 and N350 is now N1, 300; a kilogram of chicken previously sold at N1, 100 is now N1, 500/kg; 50kg basket of tomato initially sold for between N4, 000 to N5, 000, currently sells for between N13, 000 to N15, 000; medium sized tuber of yam sold for N500 now N1, 200; 25 litres keg of palm oil from N9, 000 to N11, 000. This cuts across almost all categories of produce.

It was learnt that a bag of flour that sold N9, 000 before COVID-19, now goes for N13, 000, while a bag of sugar now costs N24, 000 as against the former price of N13, 000. Butter is now N12, 000 against N7, 500, while a bag of milk, which was N29, 000, now goes for N52, 000.

From all indications, chronic hunger and famine, arising from the rising cost of food crops and other agro commodities appear to be hitting many parts of the country, especially the low-income earners and the vulnerable, as the situation is becoming unbearable.

The threat posed by the food crisis compared to the huge interventions by the government over the years, is attracting the attention of stakeholders, as they begin to interrogate the impact of the huge investment of the sector.

Though the effect of last year’s flooding and incessant herders attacks were attributed to the lingering food crisis, farmers and other stakeholders’ claim the loans and other interventions were not properly disbursed.

While reports indicated that ‘political farmers’ majorly enjoyed some of the interventions, investigations showed that some beneficiaries failed to pay back.

Just last year, the Federal Government sued about 70,000 farmers in Kebbi State over failure to repay N17b loan they collected under the Anchor Borrower Programme (ABP).

According to the chairman of Kebbi State chapter of Rice Farmer Association of Nigeria (RIFAN), Muhammed Sahabi Augie, out of the 70,000 farmers that benefitted from the loans in 2015, only about 200 farmers settled their loan.

In 2018, the Bank of Agriculture (BoA) disclosed that the fund it disbursed to farmers totalling over N60b had not been paid back, and that it was on a recovery mission of disbursed funds.

Same year, the Kano State Deputy Governor, Alhaji Nasiru Yusuf Gawuna disclosed that only four farmers out of 4,500 farmers in the state who benefitted from revolving loans paid, which was affecting others wanting to apply for loans. Out of N950m loan released by the CBN to Kano State rice farmers, only a paltry N6m was paid back.

While some farmers are alleging that conditions for the loan’s repayment were quite stringent, others are of the view that there was not enough enlightenment campaign to farmers that the loans were to be paid back; hence some of them saw it as a reward for voting for President Muhammadu Buhari in 2015.

A Food Security Advocacy Project Coordinator at Oxfam, Saratu Abiola, said the loans failed because government at state or federal level often doesn’t reach intended beneficiaries. “Most farmers are smallholders who are often likely to be unbanked. Either they don’t have the access to do paperwork needed to access loans, or the loans end up going to “briefcase” farmers as a result of corruption.

“This is because the real farmers are often not organised into groups recognised and documented by the state and federal government. They don’t have any formal platform to engage agric stakeholders, causing the ineffectiveness of their efforts on public service delivery. The latter is especially important, because it means that government doesn’t have any way of confirming from their intended beneficiaries that they’ve received loans.”

Abiola said government needs to ensure that there’s adequate advertising of the loan schemes and adequate support to farming clusters to access the loans for the interventions to achieve the desired success.

“The government would also do well to create formal platforms, where farmers can engage them directly not just on loans, but other kinds of support they may provide, from fertilizer subsidies to tractor distributions. Also, loans given directly from government are likely not to be paid back. This is because government money is often seen as a “gift”.

“Inasmuch as they want to be seen as supporting farmers, for workability, governments should always partner with a private entity (like a bank) to engage with farmers on loans. There are many financial institutions that do this kind of work, like LAPO. They know how to pace loans in such a way that farmers won’t find it to pay back.”

The CEO of Fourteen Farms, Ifeware/Ife, Osun State, Julian Akinremi, said though a lot of money has been spent on agriculture in the past five years, there are other issues that are yet to be addressed.

“Making funds available for farmers isn’t enough reason to expect food sufficiency. Aside this, there are issues that must be addressed to make the loans have the desired impact. These include security, mechanisation for smallholder farmers, food processing facilities, availability of logistics, encouragement to young farmers and availability of improved seedlings.

“Finally, I would say despite the fact that funds have been made available compared to other sectors, they are not enough. Also, access to the funds made available is limited. Ask a number of farmers and one will see the funding isn’t enough. Young people who want to go into cash crop farming don’t have the necessary support. The funding is appreciated, but the factors above and lots more need to be in place for government policies and effort to be felt.”