By Akanfe Tiri
WITH the reported slump in oil prices due to Coronavirus plaguing the world today, many are already scared that the forecast for Nigeria’s 2020 growth might nose dive as it is projected a fall in oil prices will quicken depreciation of the Nigerian currency amid rising external debt.
Brent crude oil prices fell to approximately $33 per barrel on Monday, March 9, the worst of its kind fall in a day since 1991. According to analysts: “Given Nigeria’s heavy reliance on oil as the major contributor to GDP, the reduction in oil demand is severely limiting the supply of dollars to the economy, resulting in illiquidity in the market and buying pressure on those dollars available.”
They added: “As the Coronavirus continues to damage the global economy, we expect to see a further weakening pressure on the naira in the coming days.”
But some analysts said that Nigerians should worry less as the projections of the country’s economy will continue to grow with policies put in place by the Central Bank of Nigeria before now. They are quick to point to the Anchor Borrowers’ Programme, ABP, initiated by the Central Bank, an intervention programme for sustainable economic growth.
The programme which was launched by President Muhammadu Buhari on November 17, 2015 is intended to create a linkage between anchor companies involved in the processing and smallholder farmers, SHFs, of the required key agricultural commodities.
During the launching of the agricultural programme and flag-off of the 2015 dry season farming in Birnin-Kebbi, Kebbi State, President Buhari frowned at the huge sums spent by Nigeria on the importation of food items that could be produced locally, stressing that Nigeria’s N1 trillion importation bill at the time was not sustainable. The CBN’s Anchor Borrowers Programme, kicked started in Kebbi was, according to Mr. Emefiele, also targeting to change Nigeria from a major importer to a major exporting country as well as provide food security for the nation.
Before introduction of the ABP, allocation of foreign exchange to the importation of items such as rice, wheat, milk, tomato, fish, cotton and fertilizer among others, had contributed greatly to the depletion of the nation’s foreign reserves, especially in the face of low oil revenue resulting from falling oil prices. The implication was rising unemployment and escalating food imports. This prompted the CBN to shift from concentrating only on price, monetary and financial system stability to act as a financial catalyst in specific sectors of the economy, particularly agriculture, in a bid to create jobs on a mass scale, improve local food production and conserve scarce foreign reserves.
The programme is also a platform to build capacity of banks in agricultural lending to farmers and entrepreneurs in the value chain, by reducing commodity importation. It is said to have helped in reducing poverty among smallholders, while assisting rural subsistent farmers to reach commercial production levels. After the rice boom that has seen many homes ditching expensive imported rice for home grown local rice consequently saving the country huge foreign exchange, the CBN recently commenced efforts to revive commercial production of tomato and textile in the country, to serve as a remarkable lift to the economy.
CBN Governor, Mr. Godwin Emefiele, recently said the Bank would sustain its intervention in the agriculture sector through its development finance mandate, to help catalyse growth in critical sectors of the economy such as agriculture and the manufacturing sectors. The CBN governor explained that through programmes such as the ABP, the Commercial Agriculture Credit Scheme and the Bankers Committee Agri-Business/Small and Medium Enterprises Investment Scheme, AGSMEIS, the apex bank has improved access to markets for farmers by facilitating greater partnership with agro-processors and manufacturing firms in the sourcing of raw materials.
“As a result, manufacturers have integrated local options in sourcing their raw materials. Partnerships forged through contracts between farmer cooperatives and agro-processors have also helped to support improved production of agricultural commodities such as rice, cotton and maize. Today, lots of private rice mills have sprung up in some states like Kebbi and Ebonyi, paving the way for more investment flow.
“To address some of the challenges faced by local farmers and manufacturers, we embarked on measures to discourage smuggling and dumping of restricted items into the country by imposing restrictions on the use of financial institutions in Nigeria by identified smugglers as their activities undermined the growth of our local industries. These measures are aiding our efforts to support local cultivation in rice, cotton and fish, etc,” he disclosed
The apex bank had set aside a portion of the N220billion Micro, Small and Medium Enterprises Development Fund to finance agricultural projects at a single-digit interest rate of nine per cent. Chiefly among the aims was to create economic linkages between over 600,000 smallholder farmers and reputable large-scale processors to increase agricultural output and significantly improving capacity utilisation of integrated mills.
Noticeably, the gap between the levels of local rice production and domestic consumption has been reduced within a space of three years. Today, the Anchor Programme has impacted rice production tremendously in the country that Nigeria’s rice farmers and millers who have struggled in the past to sell their products are now smiling to the banks as demand for the crop continues to rise owing to the on-going border closure and the Anchor Borrowers Programme.
The border closure and Anchor Borrowers initiative have made farmers and millers ramp up their production to meet the ever-increasing demand for rice- a key staple in the Nigerian diets. As a result, Nigeria’s rice production has risen to an average of four metric tons per hectare and this made it possible for farmers to meet up with the market rice needs during the 2019 festive season.
Aminu Goronyo, national president, Rice Farmers Association of Nigeria said: “Lots of rice farmers are increasing their production areas because there is a huge market for paddy since the border closure. This is because millers are patronising rice farmers now and off-taking all that they produce immediately.” He stated that before the border closure, farmers had over 20,000 tons of paddy lying fallow because millers were not off-taking from them.
The Chairman of Rice Farmers Association Kebbi State chapter, Alhaji Muhammad Sahabi, said that the Anchor Borrowers Programme in the state has been very successful as it assisted farmers to enhance their businesses since it was introduced four years ago. At the last count, 200,000 smallholder farmers from 29 states of the federation have benefitted from the N43.92 billion released through the CBN and 13 participating financial institutions to fund the agricultural programme.
In an attempt to tackle issues of smuggling, the Federal Government had since August 2019 shut down the Nigerian borders. The move compelled Nigerians who generally have a high preference for foreign varieties to shift to local brands. Just recently, the CBN has approved the disbursement of about N75 billion as loan to farmers in the 36 states and the Federal Capital Territory, FCT, under the Nigerian Incentive-Based Risk Sharing in Agricultural Lending, NIRSAL.
The loan guarantee scheme is a public-private sector initiative set up to transform the country’s agricultural sector. It was initiated by the apex bank, the Bankers’ Committee and the Federal Ministry of Agriculture and Rural Development, to guarantee 75 per cent loans provided by Deposit Money Banks, DPB, to farmers as part of efforts to transform the country’s agricultural sector.