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Weak financing, scarcity of labour mar agro-allied businesses


• Farmers commend border policy, interventions
Stakeholders in agriculture and allied industries have pinpointed weak financing, the comatose state of the Bank of Agriculture (BoA) and dwindling farm labour as factors dragging the sector down.

Inability of the government to restructure the bank for coordinated, structured and country-wide sustainable medium to long-term agricultural credit facilities and other transactions, despite the current government’s plan to do so, has incapacitated agricultural financing significantly.

The plan is to make farmers have over 40 per cent shares of the bank, while the government (CBN) and the public would hold the remaining shares, managed strictly as a private sector institution for efficiency.

The only change in the bank recently was an appointment of Alwan Hassan as new acting Managing Director of the bank as disclosed in a letter sent to the Minister of Agriculture and Rural Development, Sabo Nanono, dated May 5, 2020.


“Commercial banks with structures and funds are not really interested in agricultural financing except interventions and de-risked facilities in off-taking arrangements,” a farm financial manager with an old generation bank, who prefers anonymity, told The Guardian.

Treating agriculture as a way of life has failed to guarantee food sufficiency and security. The paradigm shift, agro-economic scientists have argued, is doing agriculture as a business with improved inputs, good management practices, mechanisation and value chain development for post-harvest management and better value creation. Without adequate financing, however, treating agriculture as a business is impracticable.

Prof. Bamidele Omitoyin, a former Dean of the Faculty of Renewable Natural Resources, University of Ibadan, while analyzing the policies and programmes of the government, said though thereTop of FormBottom of FormTop of FormBottom of Form has been little improvement in the agricultural sector, “the closure of boarders helps many farmers to sell their products at fairly competitive prices, particularly poultry and rice.”
He admitted that though the government had made a lot of efforts in terms of resources invested in the sector through the CBN, particularly the Anchor Borrowers’ scheme, with 9% interest rate, the outcome is a far cry from the resources given out to the farmers. 

Prof. Omitoyin said, “This interest rate is still too high. Interest rate for money borrowed for agriculture and aquaculture should not be more than three to four per cent. Other major problems still remain access to finance at the right time and market access for the farmers’ produce at reasonable prices.”

Adducing reasons agriculture has fared badly, Mr John-Bede Antonio, an agro-produce exporter based in Lagos, said in the last one year, there has been a loss of momentum in the agricultural sector with several distractions.

Some positive developments, Anthonio added, include the increase in rice production, “which is not sustainable and may collapse by 2022. NIRSAL and CBN are pushing hard with some initiatives, but Nigerians are waiting to see the results.”

Paltry funds allocation and poor budget implementation, as well as grossly inadequate credit facilities in the sector are counter-productive to the spirit and intent of the Maputo and Malabo declarations on agriculture, which stipulate a minimum of 10 per cent of the yearly budget of each of the African countries to the agro-allied sector.

However, while expressing a contrary view, Prof. Lateef Sanni, ex-Deputy Vice Chancellor of Federal University of Agriculture, Abeokuta (FUNAAB), said the sector achieved growth in the production of some commodities, especially rice, due to border closure and forest restriction against food related importation.

He also identified more specialised financing and interventions through the government’s Anchor Borrowers’ programme as good steps, saying, “the commercial banks are also working with the CBN.” 

A factional president of the All Farmers Association of Nigeria (AFAN), Mr Ibrahim Kabir, disclosed to The Guardian that the sector has performed abysmally low in the last one year due to incompetence, inexperience and inability to utilise good advice or professionals in the public administration of the sector.


“To candidly answer your question, I must say that in the last nine months since the current Minister of Agriculture assumed duty, we have not seen any achievement.  The rhetoric about mechanisation through the loan-in-kind from Brazil is yet to materialise. So also is the training of 50,000 extension agents,” Kabir said. 

In the same vein, Prof. Damian Chikwendu, Team Lead, Cultivating New Frontiers in Agriculture (CNFA), while assessing the sector, said “crop production last season was generally good.”

Chikwendu said the extended rainfalls into October made it difficult for farmers to harvest and dry their grains properly. In some cases, this led to destruction of some of the crops and growth of molds on the grains, thereby creating good environment for contaminants like aflatoxin and fumonisins to thrive, he added.

Uncoordinated activities and policy summersaults in the agricultural sector has caused poor industrialisation of crops, and low demand for primary produce. These, in turn, have worsened post-harvest losses, caused little or no profitability and inability of farmers to sustain crop production, as well as discouragement of millions of youths to participate in the agro-allied businesses. This is compounded by commercialisation of motorcycles, which has taken off a larger number of younger people who could be useful in agricultural production.

Infusion of targeted funds, lowering of interest and moratorium extension of intervention credit facilities by the Federal Government through the Central Bank of Nigeria (CBN), though described by many critics as tokenism and unstructured intermittent interventions, have been described as moves in the right direction by some stakeholders, especially in the absence of a functional bank of agriculture.


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