Lawmaker seeks integration of microfinance banks into agric financing

Senator Okey Ezea has advocated for the integration of microfinance banks (MFBs) into the disbursement of agricultural and rural credit programmes, saying it would improve access to rural finance.

Ezea, who represents Enugu North Senatorial District at the National Assembly, spoke at a forum in Nsukka, Enugu State, to inform his constituents about some of his constituency projects and his legislative agenda.

He said that the inclusion of microfinance banks in the disbursement of agricultural credits would eliminate the hijacking of such funds by politicians and their cronies who prevent real farmers and rural investors from accessing such funds.

He also said the business orientation of MFBs would help prevent repayment failures that have led to the failure of similar programmes in the past.

Citing the example of the Nigerian Agricultural Cooperative and Rural Development Bank (NARDB), which, according to him, has had limited successes as a result of political hijacks and repayment failures, Ezea recommended that the involvement of MFBs as disbursement agents would ensure proper tracking of disbursements and enforcement of repayments to ensure that the funds achieve the targeted development multipliers.

“The Federal Government has, in the past, created some special purpose finance vehicles to drive investments in rural agriculture and other enterprises. One of them is the Nigerian Agricultural Cooperative and Rural Development Bank (NARDB). This special bank was designed to provide single-digit credit to rural farmers and businesses. I do not know how effective they have become, but there is evidence that a lot needs to be done to make its impact felt .

“The first thing to do is to redesign the disbursement methods by making the thriving microfinance banks spread all over the country the disbursement channels. This will eliminate the situations where such special funds are hijacked by politicians and their cronies. It will also ensure improved repayment frequencies and costs because it is the MFBs that will work out repayment plans failing which they will be excluded from future disbursements,” Ezea said.

He explained that when this is supported by the provision of appropriate infrastructure such as roads, rural development would spike and result in a boost in the country’s Gross Domestic Product (GDP) by as much as 30 per cent.

He added: “One thing that governments at the federal, state, and local government areas should do is to be deliberate about the provision of infrastructure in the rural areas. Roads are important, so also are agricultural inputs. This was why in my constituency projects, I am paying attention to the construction of rural farm roads, provision of fertilizers, and other items that enable farming. Our intervention was chiefly to point towards the direction of what we believe should be the area of greater national priorities, and that is why I believe the government at all tiers should shift attention to rural economic exploitation through the provision of access roads, potable water, and other tangible and intangible amenities.”

Ezea stressed that these would ensure that productive capital gets to rural entrepreneurs, curtail migration, and “become the nectar that will draw the interest of bigger private sector investors that will be attracted by infrastructure, an availability of opportunities along the value chain, thus changing the economic fortunes of the country in five years or less.”

He noted: “If government at all levels becomes intentional about this, the 30 per cent increase which I projected will likely be surpassed. Our traditional agricultural resources alone are enough to transform this economy if duly and profitably exploited. If we then exploit the various value chains of the crops we produce, like yams, cocoa, cassava, oil palm, and all the fruits and grains that thrive in many parts of this country, I do not see any reason we wouldn’t be globally competitive in food production in a few years.”

He said intentional rural development could lift the country’s GDP from current World Bank estimates of around $1.315 trillion to $2 trillion or more if the appropriate measures are taken to harvest the hidden wealth in its rural communities.

Currently, the contribution of Nigeria’s rural population (which constitutes more than 45 per cent of the country’s total population) to the national GDP is estimated at 25 per cent, but Ezea believes that with the right policies, the country would get a lot more from this segment of the population.

“When I speak of rural development, I do not want to be understood as referring to the urbanisation of the rural areas. On the contrary, I am talking about the exploitation of the abundant economic opportunities in our rural communities, the creation of wealth through deliberate policy actions and redirection of investment opportunities.

“There is a lot we can gain from investing in the economic opportunities in our rural areas. Unfortunately, it does appear that the business community does not see the abundant opportunities, but investments in agriculture and its endless value chain is one area that is capable of taking millions of people out of poverty through job creation and birthing market opportunities where none existed,” he said.