Thursday, 8th June 2023

Loan recovery flops as Anchor Borrowers’ scheme gulps N240b

By Femi Ibirogba, Head Agro-Economy
22 July 2020   |   4:29 am
Recouping about N240 billion ‘revolving’ credit facilities granted to small-scale farmers and processors in the Federal Government’s Anchor Borrowers’ Programme...

• Maize association says members yet to repay 2019/2020 N5.4b
• ‘Poultry association not carried along in ABP’
• MAAN, catfish farmers lament challenges, technical exclusion

Recouping about N240 billion ‘revolving’ credit facilities granted to small-scale farmers and processors in the Federal Government’s Anchor Borrowers’ Programme has been hampered by COVID-19 pandemic.

The situation has been worsened by the fact that the lack of mechanisation has adversely affected sustainability of farming.

The inability to recoup the loans also spells doom for further deepening of sustainable agricultural financing and food security objectives as envisaged by the scheme’s policy formulators.

Agronomists and farm researchers also express concern that the scheme’s continuity, as good as the objectives appear, could be threatened and expansion of coverage truncated if the circular flow of the funds is interrupted by inability to recoup the funds.

President of Maize Association of Nigeria (MAAN), Dr Bello Abubakar-Annur, disclosed to The Guardian that his members participated in the 2019 ABP credit facilities for the first time, but unfortunately, COVID-19 had truncated the repayment of the loans.

A designated off-taker in the contract with the organised maize farmers, TAK Agriculture Ltd, was reconciling and aggregating tonnes of maize produced by the farmers when the pandemic interrupted the process, the association said.

About N5.4 billion was advanced to the farmers under MAAN but no repayment had been concluded when the disruption came around February/March.

He lamented that the pandemic had dealt a devastating blow to farmers’ productivity during the dry season, off-taking logistics and repayment plans.

Similarly, the President, Manufacturing Association of Nigeria (MAN), Mr. Mansur Ahmed, hinted The Guardian that members of MAN had access to financing under the scheme for aggregation of paddies (unprocessed rice) and maize through working capital facilities.

“But,” he added, “this was less successful as many middlemen were allowed to intervene which distorted prices and [hence] reduced farmers’ revenue, leading to payback defaults.”

He suggested that “there is need to widen the net of beneficiaries, especially in states with sufficient opportunities for expansion of agriculture and there should be support for small-scale industries serving the agricultural sector, like packaging, other crop-processing businesses such as cassava, cashew nuts and fruits.”

Ahmed said the scheme should be extended to close the value chain gap by supporting aggregators and market operators.

The commodity exchanges, he recommended, should be re-engineered to provide market information and enhance trading.

Kebbi State Chairman of the Rice Farmers’ Association (RIFAN), Mr. Augie Sahabi, said each member got N250,000 worth of inputs, including seeds, fertiliser and agrochemicals in the off-taking arrangements, but the farmers had been affected.

About 78,000 farmers are said to be members of the association involved in the ABP scheme in the state. By implication, over N19.5 billion is at stake in Kebbi State alone.

The CBN Governor, Godwin Emefiele, had told the Senate Committee on Banking, Insurance and other Financial Institutions in May 2019, when he was screened for the second term re-appointment, that over N190 billion had been disbursed to about 1.1 million farmers holding fewer than five hectares each.

Also, a microfinance bank of the CBN-funded Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) got applications from 80,000 Nigerian farmers and agro-allied industry operators in April 2020 for N50 billion loan for Micro and Small Medium Enterprises (MSMEs).

NIRSAL Microfinance Bank boss, Mr. Abubakar Kure, had said CBN introduced the N50 billion Targeted Credit Facility as a stimulus package to support households and MSMEs following the COVID-19 pandemic.

But the apex bank and NIRSAL have been silent over the performance of the loans, their ability to recover the facilities from farmers and the extent to which the loans have boosted food production and allied businesses. There have been, however, indications that farmers’ productivity in rice and poultry have increased following the closure of land borders against smuggling.

While defending his accomplishments during his first term in office, Emefiele had said the scheme had made it possible for the masses to access credit, generate employment and boost economic activity amongst the rural populace.

Commenting on the workability and sustainability of various interventions in agriculture, the National President, All Farmers Association of Nigeria (AFAN), Mr. Ibrahim Kabir, said the interventions that seem to be in competition with one another were without practising farmer’s involvement.

“The credit from the CBN, through commercial banks and several other windows, are not necessarily available to the real farmers, but largely to briefcase-carrying farmers in Abuja. The psychology of the administrators of these loan-giving institutions is not taking cognisance of agricultural lending and its peculiarities.

The banks, including the CBN, Kabir said, did not care about inhibitors of production, storage, post-harvest losses, marketing and transportation as risk factors in agricultural lending.

“There is a clear dearth of knowledge and appreciation of the issues around agricultural lending,” he lamented, disclosing that some bank executives he interfaced with said loan recovery was the low-hanging fruit to boost their income without being considerate of the COVID-19 effects on farmers’ finances.

He advocated support for a bill to establish the National Agricultural Development Fund (NADF), presented for public hearing at the Senate on July 13, saying, “it is the answer to this anomaly and the agriculture space will thrive without the commercial banks for agricultural credit, and agribusiness will definitely prosper sustainably with this improvisation, which is apt and poignant.”

Kabir added that the “CBN ABP has defined the competences it impacts and within those limits, rice and maize have become very prominent. As it is today, the narrative is that the programme is succeeding.

“CBN has series of complaints of very poor loan repayments and the farmers on the other hand have expressed displeasure with the timely disbursement of the integral components of the programme we still feel the intervention is helpful. With modification, the ABP will make more impact going forward.”

President, Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN), Mr. Rotimi Oloye, said: “ABP does not work much for fish farmers, because of absence of logistics, unlike in poultry where they already have slaughter houses, cold chains and available export avenue.”

He said that in aquaculture, there were no processing plants before freezing, unlike a more established poultry industry, and that very little space was provided for home-grown fish in the school-feeding scheme “because the sum allocated for a meal is so little to accommodate home-grown fish.”

Surprisingly, the President, Poultry Association of Nigeria (PAN), Mr. Ibrahim Mam, when contacted by The Guardian, said most of the credit facilities were not routed through the poultry association and he was not in a position to say if farmers had been repaying or defaulting.

“So, how would I know something that I am not involved in? I cannot know whether there is repayment or not. That is why I insist that if you want things to work, how it works elsewhere, (intervention) loans should be through the commodity associations. But in this country, ‘na man knows man.’

“So, the loans are not coordinated through the association and it will be difficult for us to connect on this. I said it that if they were giving billions to farmers, they should do so through the associations. But they insisted on giving start-up youths. You have not assisted the persons suffering in that business, you are bringing new persons who have no interest, trying to convince them. Is it workable? That is our challenge in this country,” Mam said.

The ABP scheme was introduced by President Buhari in 2015 in furtherance of the Agricultural Transformation Agenda (ATA) of the Goodluck Jonathan administration.

Inaugurating the scheme in 2015 during the dry season farming in Birnin-Kebbi, Kebbi State, Buhari frowned on importation of foods that the country could produce, stressing that Nigeria’s N1 trillion food importation bill at the time was not sustainable, and tenable.

Before the scheme commenced, forex to importation of rice, wheat, milk, tomato, fish, cotton and fertiliser, among others, depleted the country’s forex reserves, put pressure on the exchange rate and caused galloping inflation amid the 2016-2017 economic recession.

As of October 2018, it was disclosed by President Buhari that 2.5 million direct jobs had been created through the implementation of the scheme, and about one million more indirect jobs were believed to have been created.

President Buhari had said that 862,069 farmers cultivating 16 crops and raising poultry on about 835,239 hectares of land, in addition to fish farming, had benefited from the programme, in collaboration with the states.

However, efforts made to get an official update on the ABP performance from the CBN were unsuccessful as messages sent to the bank’s spokesperson, Mr. Isaac Okorafor, were not responded.

On Tuesday, July 7, 2020, Saturday, July 11 and Saturday, July 17, 2020, the following SMS and WhatsApp messages was sent to Okorafor: “Good evening Sir. Over N190 billion was disbursed on ABP till May 2019. Please, what is the current figure? How about the loan recovery? What is the recovery rate? Are farmers and processors repaying the loans? How has insecurity impacted on loan performance and recovery? We need these to write a balanced story on the issues raised, Sir.”