By Babajide Komolafe
AFTER 18 months of steady decline, Nigeria’s inflation rate resumed upward trajectory in August, which persisted in September. The reversal was driven by higher food prices, triggered by shortage of food supply across the country owing to the farmers/herdsmen crisis and recent flooding in some food producing areas.
While the authorities are making efforts to address these challenges, the above reveals apt connection between the attainment of the macroeconomic goal of price stability and agricultural productivity. The quest by monetary authorities to achieve single digit inflation rate requires efforts and measures that will encourage huge investment in agriculture to boost food supply and hence drive down prices of agricultural products.
Realising this, the Central Bank of Nigeria (CBN), in line with its developmental functions and in collaboration with the federal government and banks established various agricultural schemes as a way of bridging the funding gap. Such interventions include the Commercial Agriculture Credit Scheme (CACS), Commercial Agriculture Development Programme (CADP), the Interest Draw-back scheme, Agricultural Credit Support Scheme as well as the recently introduced Anchor Borrowers’ Programme (ABP).
National food security
The broad objectives of most of the schemes are to fast track development of the agricultural sector by providing credit facilities to commercial agricultural enterprises at a single digit interest rate; enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation; generate employment and diversify revenue base.
In complimenting the efforts of the CBN, Heritage Bank Plc has made a huge success of the schemes by making funds available to both individuals and corporate organisations in their efforts to increase agricultural output. Within its five years in operation, Heritage Bank, under the leadership Mr Ifie Sekibo, the Managing Director and Chief Executive Officer, and in partnership with critical stakeholders, has distinguished itself in financing critical agricultural projects in the country and, in the process, putting smiles on the faces of many farmers.
Collaboration to provide loan for aquaculture, reforestation projects
In a bid to further support the real sector and unlock food potentials, Heritage Bank Plc in collaboration with CBN provided N2billion long term facility under the Commercial Agriculture Credit Scheme (CACS) to Triton Aqua Africa Ltd (TAAL).( TAAL known as Triton Farm accessed the CACS through Heritage Bank, which was used to set up aquaculture businesses; nursery/hatchery to produce fingerlings and brood stock in Ikeja and earthen ponds for catfish and Tilapia in Asejire, Iwo and Gambari towns in Oyo State.( The company’s strategy is to embrace backward integration through production of fish locally and reduce its importation of frozen fish and as well to assist small scale farms by producing quality breed fingerlings.
Under the arrangement, TAAL will also help small-scale farms increase their fish production by making fingerlings available to them. In the short term, the loan is expected to help Triton double its current production capacity of 25,000 metric tonnes with a projection to scale it up to 100,000 metric tonnes in five years.
The bank also has thrown its weight behind Globus Resources Limited, a subsidiary of Triton Group, to flag off the second phase of afforestation programme in Oyo State. Nigeria’s current demand capacity for fish is estimated at 2.7million metric tons and the country currently produces 800,000 metric tons. Triton is now producing 25,000 metric tons and with them on board, about 25,000 metric tons capacity will be added to our current production, the company’s projection is to reach 100,000 metric tons in five years.
Partnership with Oyo State government
Heritage Bank is in partnership with the Oyo State government in a multi-billion-naira project to give agriculture a boost in the state. Under the initiative, the bank is supporting the Oyo State Agricultural Initiative, OYSAI, a programme designed to revive agriculture, boost agro-allied businesses and massive empowerment programme for both youth and women across the state through the creation of thousands of jobs in the sector.
This huge, albeit laudable, project that is spread across 3,000 hectares of land in 28 of the 33 local government areas of Oyo State, is in three stages: food crop cultivation, cash crop/horticulture and food processing. Heritage Bank is supporting agro investors involved in this initiative with funds and advisory services and indications are that the programme has already led to more than 30 per cent increase in food production in the state.
Support of small holders’ farmers in Kaduna and Zamfara in rice/soyabeans production under ABP
Heritage Bank has also supported thousands of small holder farms in Kaduna and Zamfara states to benefit from the bank’s financial support for rice and soya beans production under the Central Bank of Nigeria’s Anchor Borrowers Programme (ABP). Sekibo says the bank’s drive to support rice production is borne out of the conviction that agribusiness is profitable and act of patriotism to achieve food security and sufficiency in the country.
He hinted that Heritage Bank is effectively tackling the bottlenecks since it has long identified the opportunities in agribusiness before the collapse of crude oil prices through its various programmes, which will contribute to the projection for year 2020 in the production of 7.7million metric tons of milled rice or 10.8million metric tons of paddy rice at milling recovery ratio of 62 percent.
On Heritage Bank’s involvement in ABP, Sekibo said that the bank provides on-lending funding to aggregated farmers to grow various produce that will serve as raw materials to the processors, thereby ensuring market linkages and access to market as well as reduce importation and conserve Nigeria’s external reserves. In 2016, the sums of N54.89 million and N248.413 million were sourced from CBN and disbursed as loans to 185 rice farmers and 414 soya bean farmers respectively in Kaduna State. In 2016, N37.995 million was disbursed to 259 rice farmers via 11 cooperatives in Zamfara State.
The bank executed Memorandum of Understanding (MOU) for partnership with NIRSAL in 2017 with the following transactions already consummated: Poultry farming in Oyo State – N29million received from NIRSAL and disbursed to farmers: Maize cultivation in Ogun State – N157million received from NIRSAL and disbursed to farmers: Cassava cultivation in Kebbi State – transaction size is about N500 million approved by CBN.
Home-Grown School Feeding Programme (HGSFP)
The National Home-Grown School Feeding Programme (“HGSFP)” is one of the Social Investment Programmes of the Federal Government of Nigeria. The programme aims to provide one free meal per day to pupils of government-owned primary schools. The programme currently caters for pupils in primary one to three. Heritage Bank currently participates only in Oyo State. The programme is coordinated from the National Office in conjunction with state offices.
As at date, a total sum of N1.8 billion has been received and disbursed to food vendors and suppliers for Oyo State. Over 1,500 cooks have been enrolled on BVN across the 33 Local Government Areas in Oyo state. Over 3,000 accounts have been opened cooks/vendors. 1,433 customised Oyo/HGSFP debit cards have been issued
N232million Biase Plantations for best-in-class palm oil
Heritage Bank Plc signed a N232 million pilot phase of out-growers agreement with Biase Plantations Limited (BPL), and its joint venture partner, PZ Wilmar Limited to produce best-in-class palm oil, using the ABP model. The first tranche of N113 million has been received and disbursed accordingly. The pilot scheme covers 45 farmers, grouped into four co-operative societies with a land mass of 150 hectares, and the funds to be administered is from BPL.
Partnership with BKG to resuscitate palm oil industry
Heritage Bank Plc partnered BKG Exhibitions Limited-Nigeria in organizing Nigeria’s first ‘PalmTech Expo’ to catalyse the resuscitation of the palm oil industry in Nigeria based on the rapid development and increasing contribution to the nation’s Gross Domestic Product (GDP). Consequently, 13 states in the palm oil producing states across the federation in conjunction with over 50 Nigerian and international companies were exhibitors at the expo.