The effort to diversify Nigeria’s economy away from an overdependence on oil has landed on multiple administrations’ agendas but mostly remains unfulfilled. Agriculture in Nigeria is one sector where the government could benefit from additional focus and investment.
The agricultural sector contributed over 60 percent of Nigeria’s Gross Domestic Product (GDP) in the 1960s. However, it has dwindled over the years as a result of the emphasis on oil
The Nigerian Bureau of Statistics (NBS) stated that in the last quarter of 2019, agriculture’s contribution to GDPwas 26.09 percent, and 24.65 percent, 30.77 percent and 26.95 percent for quarter 2, 2020, quarter 3, 2020 and quarter 4, 2020, respectively.
Nigeria’s agriculture sector faces many challenges, including poor infrastructure, flawed research and recordkeeping, and illiteracy, among others. Inadequate access to capital and credit facilities is one of the most critical for rural farmers. Many private agro investment companies and relevant government ministries are slowly stepping in to fill the gaps.
The Nigerian government has a record of development programs that have failed to yield much harvest, including the National Accelerated Food Production Programme in 1973, Operation Feed the Nation in 1976, and the Green Revolution Programme in 1980.
The consequences of this neglect are glaring: At a workshop in October 2020, Abdulkadir Mu’Azu, permanent secretary of the Federal Ministry of Agriculture and Rural Development, rated Nigeria’s annual food imports at $5billion. About $1.5billion goes to the importation of milk and other dairy products.
Repositioning Nigeria’s agriculture sector requires governments, institutions and agencies to be innovative in extending credit facilities to smallholder farmers. In recent years, government agencies are gradually starting to realize the hazards of treating food insecurity with levity.
Hunger and unemployment are well-known causes of crime and criminalities, and tackling them could help return the country to the path of peace and prosperity. The rising kidnapping cases, banditry and violent crimes across the country are already pointers that there is no luxury of time to act.
On Nov. 17, 2015, the Central Bank of Nigeria (CBN) launched the Anchor Borrowers Programme (ABP). The program focused on providing farm inputs in kind and cash (for farm labour) to smallholder farmers to boost the production of commodities, stabilize input supply to agro-processors, and address Nigeria’s negative balance of payment on food.
According to CBN, some 3.8 million farmers nationwide have benefitted from the program and received up to 554.61 billion. “The ABP has helped farmers improve their yields,” the bank said. “For maize, we now do five metric tonnes per hectare and for rice, we’re improving from four metric tonnes per hectare to ten metric per hectare.”
The ABP has a single interest rate of nine percent. At harvest, the smallholder farmers supply their produce to the agro-processors (Anchor), who pay the cash equivalent to the farmers’ account. The ‘Anchor’ could be a private integrated processor or the state government. However, the programme’s recurrent problem has been the inability or refusal of many farmers to pay back.
Like ABP, another program that offered targeted support to farmers is the Agricultural Credit Guarantee Fund (ACGSF). The fund is a joint initiative of the federal government, the CBN, and the Bankers Committee. Here, a farmer can expressly obtain a loan of up to 20,000 naira with a personal guarantee from a reputable community member, or more than 20,000 naira if the farmer belongs to a related cooperative society.
The Bank of Agriculture, Bank of Industry, and the Nigeria Agricultural and Cooperative Bank have similarly scaled support for farmers.
The cooperative-based business development model is gaining popularity in the agricultural sector because it offers a more credible platform for financial institutions to extend their credit support to operators. At a certain point in every business’s life cycle, people need more money to expand. Cooperatives help members overcome credit challenges. They also enable their members to obtain loans from their savings within the society and from the government.
For instance, the one thousand members of Hope Concept Cooperative, a Lagos-based farmers’ cooperative society with farmland in Abeokuta Ogun State, received 330 million naira from the CBN to finance the 2019 farming season project.
New farmers especially smallholders facing funding or equipment challenges, can avail themselves of the services of firms like Farmcrowdy, Nigeria’s first digital agricultural crowdfunding platform. Farmcrowdy connects smallholder farmers with investors. Nigerian “farm sponsors” as the investors are called, select the farms they want to invest in on the firm’s website shop or on its mobile app. It then uses the funds to hire farmers, lease land and provide inputs such as fertilizer, seed and technical support from planting to harvesting.
Aside Farmcrowdy, there is also ThriveAgric which crow-fund resources for small-scale farmers who receive money, seed, fertilizer, insecticide, or pesticide as well as technical training to work on rice, maize, soybeans, sorghum, poultry, and cattle farms, that run for between three to six months.
The firm has been able to upscale its operations to 11 states in Nigeria through the support it received from Venture Platform Accelerator and Google Launchpad.
In addition to the above two, there is also Verdant Agritech which helps farmers increase their productivity, earn more money, and promote sustainable farming system that thrives on largely mobile technologies. Its platform links small-scale farmers to other key players in the agricultural value chain using data to inform farmers and the stakeholders alike. Data help farmers make better decisions.
There is no doubt that thrift agriculture has contributed immensely to restoring the lost glory of agriculture in Nigeria at the wake of the oil economy. As oil prices remain unstable with more fluctuations, agriculture could offer Nigeria a familiar but now innovative sector to finance the nation’s economic progress.