How CBN’s Anchor Borrowers’ Programme is Propelling Food Sufficiency

Obinna Chima writes on the Anchor Borrowers’ Programme, which is supporting the country’s quest to becoming self-sufficient in food production. If this initiative by the CBN under the leadership of the Governor, Mr. Godwin Emefiele, is sustained, it will be one of the enduring legacies of the Buhari administration

The outbreak of the COVID-19 has rapidly changed the world. Today, globalisation has come under severe threat. Already, there are predictions that the global economy is facing an economic downturn that is worse than the Great Depression.

Due to the disruptions caused by the virus, there have been worries about unprecedented global food insecurity, with concerns that agricultural production may be dislocated by the containment measures that were put in place to halt the spread of the deadly virus.

According to the International Food Policy Research Institute (IFPRI), about 37 countries had enacted various forms of food export restrictions in response to COVID-19, even in countries where average production exceeds domestic consumption.

For example, Vietnam, the world’s third largest exporter of rice, suspended granting rice export certificates until the country “reviews domestic inventories,” while Russia, the world’s largest wheat exporter, had banned export of buckwheat and rice due to concerns over panic buying in local supermarkets.

The World Bank recently pointed out that the primary risks to food security are at the country level: as the coronavirus crisis unfolds, disruptions in domestic food supply chains, other shocks affecting food production, and loss of incomes and remittances are creating strong tensions and food security risks in many countries.

In addition, the United Nations World Food Programme warned that an estimated 265 million people could face acute food insecurity by the end of 2020, up from 135 million people before the crisis, because of income and remittance losses.

The foregoing has reinforced the need for countries to look inwards in order to guarantee food sufficiency for their citizens.

Owing to this, analysts have continued to hail the foresight of the Central Bank of Nigeria (CBN) in creating the Anchor Borrowers’ Programme (ABP), an initiative that has supported for food sufficiency in the country.

They pointed out that save for the improved domestic production in rice and some other crops, the country could have been faced with food shortage during lockdown in Lagos and Ogun states as well as the Federal Capital Territory, that saw the restriction of movement, in a bid to contain the spread of the COVID-19.

For a country of over 200 million people, and projected to be about 450 million in a few decades, the pandemic has shown that dangers lie ahead if the country does not begin to depend largely on what it produces locally.

The Anchor Borrowers’ Programme

The ABP which was launched by President Muhammadu Buhari in 2015, was designed to assist small-scale farmers to increase the production and supply of feedstock to agro-processors with the aim of creating an ecosystem to link out-growers (smallholders) to local processors.

The programme has increased banks’ financing to the agricultural sector, enhanced capacity utilisation of agricultural firms involved in the production of identified commodities as well as the productivity and incomes of farmers.

The anchor borrowers’ programme has also assisted rural subsistent farmers to reach commercial production levels.

The thrust of the ABP is the provision of inputs in kind and cash (for farm labour) to smallholder farmers with a view to boosting the production of rice, maize, poultry, sorghum, cassava, tomatoes, cotton, palm oil, Soybean, among others.

The idea is to stabilise input supply to agro-processors and address the country’s negative balance of payments on food. It is a loan to farmers without collateral and the benefitting farmers are given farm input and cash to cultivate their farms, including the experiment on rice.

According to the structure of the ABP, a farmer who wants to repay his loan can either do so with cash or give the central bank his /her produce of same value, after which officials of CBN’s Development Finance Department would sell and recover the loan.

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, in line with the President Buhari administration’s quest to diversify the economy, the CBN decided to extend the scheme to other produce.

Presently, the CBN has restricted importers of 43 items from accessing dollars from its regulated forex windows in its bid to encourage domestic production.

Also, other fiscal policies are making it increasingly unfavorable for the importation of those items. Currently, almost all the states are involved in the scheme.

Clearly, the intervention has led to a decline in imports and have resulted in significant rise in the price of imported rice.

CBN’s Focus

Following success recorded by the scheme and in line with efforts to boost food production as well as help the country avert the looming economic recession, the CBN recently disclosed that it has set aside about N432 billion to fund the value chains of nine commodities in the 2020 wet season.

It listed the commodities to include rice, cassava, maize, cotton, oil palm, cowpea, livestock, poultry, and fish.

The Director, Development Finance Department of CBN, Yila Yusuf, who disclosed this, said over 1.1 million farmers, cultivating over one million hectares of farmland were expected to benefit from the loans that would help to produce a collective output of 8.3 million metric tons. Yusuf said the focus on the 2020 wet season was to ensure the provision of improved seeds that would incentivise farmers to return to their farms.

He maintained that the CBN adopted the value chain approach across all the commodities to ensure that every player along the entire value chain, from the farmers through to the processors, was financed.

The CBN’s funding of the ABP for the 2020 season, Yusuf said, was the highest since the inception of the programme in 2015. He said the proposed funding for the nine commodities was a significant move by the CBN, considering the successes recorded in the 2019 season that contributed to shielding Nigeria from any food shortage, particularly rice.

Also, CBN spokesperson, Isaac Okorafor, said the bank was committed to aggressively fund its agricultural programmes, particularly in the 2020 agricultural wet season, to ensure the farmers go to work immediately on the cultivation of the identified commodities.

“This is to spur farmers along select crop value chains to prevent the country from sliding into a recession, as is currently being experienced in some major economies of the world,” Okorafor said.

Also, CBN Governor, Mr. Godwin Emefiele, said the bank would sustain its intervention in the agriculture sector through its development finance mandate, in order to help catalyse growth in critical sectors of the economy such as agriculture and the manufacturing sectors.

“When I became governor of the Central Bank in June 2014, imports of rice, fish, wheat and sugar alone consumed about N1.3 trillion worth of foreign exchange from the Bank. My immediate question was: can we not produce these ourselves? After all, only a few decades ago, Nigeria was one of the world’s largest producers and exporters of many agricultural products like palm oil, cocoa and groundnuts,” he said.

In line with the vision of President Buhari, the CBN has indeed created several lending programmes and provided hundreds of billions to smallholder farmers and industrial processors in several key agricultural produce. These policies are aimed at positioning Nigeria to become a self-sufficient food producer, creating millions of jobs, supplying key markets across the country and dampening the effects of exchange rate movements on local prices.

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.

“In order 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.

Furthermore, he pointed out that at some point in Nigeria’s history, the economy was heavily reliant on agriculture, with increased cultivation and exports of primary products such as cocoa, palm oil, cotton and groundnut.

He, therefore, urged the country, in view of current challenges in the global economy, to return to the era, when the growth of agricultural and manufacturing sectors were used to bring about growth and employment.

Emefiele, also said the ABP had yielded positive outcomes for the growth of the economy.

Emefiele believes the Bank’s on-going interventions, especially in agriculture, would, “help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2 billion in 2018 to $12 billion by 2023.”

President Buhari recently decried the huge sums spent by the country importing food items that could be produced locally.

He added: “The importance of agriculture in the economy cannot be over emphasised. Prior to the advent of oil, our country survived on agriculture production. During this period, the economy was built on agricultural activities and our gross domestic product grew steadily.

“Economic diversification is no longer an option for us, it is the only way for economic momentum and the drive to prosperity.”

According to him, the only way to do this was to go back to the land and develop agriculture.

Impact Assessment

Ogun State Governor, Mr. Dapo Abiodun, recently described the ABP, as a veritable scheme for fighting unemployment and ensuring food security in Nigeria.

Abiodun said Ogun had already keyed into the initiative with anchors in rice, maize and cassava production.

“We have latched on to the Anchor Borrowers’ Programme, which is basically a programme that requires that you identify an anchor, who would be the processor of off-taker and then you line up your unemployed youths, who want to be agri-prenuers,” Abiodun stated.

According to him, Ogun State selected the first 10,000 persons in its job portal to benefit from the programme by allocating to them a hectare of land each.

Explaining further, the governor stated that, “And this anchor, who happens to be somebody processing cassava and requires 200 tonnes of cassava daily, has committed to an off-take price, the CBN has provided us with funding to clear the land, the anchor and the CBN are providing us the seedlings to plant.

“We are going to provide the extension service, the CBN would pay them stipends until harvest and we intend to scale this up over the next five months to about 50,00 people.

“So, it affords us the opportunity to build capacity to employ our people and also achieve food security. Consequently, we are believing that with this, we would see a reduction in criminal tendency,” he added.

President of the Rice Millers and Importers of Nigeria (RiMIDAN), Dr. Tunji Owoeye, said the achievement recorded in the sector during the lockdown was made possible by the visionary leadership of President Buhari and Emefiele.

“The lockdown didn’t meet players in the agricultural sector unprepared because in the last few years, CBN, under Godwin Emefiele, has strengthened government intervention in the sector and this has increased output even before pandemic.

“If the intervention is sustained, I can assure Nigerians that our farmers would not only feed the nation but will feed the entire West Africa,” he added.

He also commended President Buhari for the support he has been giving the CBN’s agricultural intervention scheme.

Owoeye, also pointed out that aside from the expansive lands available for farmers, Nigeria can also boast of enough market to lift agric business.

Reviewing the performance of the sector in the last few months, the National President, Nigeria Agribusiness Group, Sanni Dangote, was of the opinion that what Nigerians experienced during the lockdown was enough to convince stakeholders that the sector deserved more attention.

“With some additional rural infrastructure, Nigerian farmers can produce more than what Nigerians need and even do exports more. It’s a matter of being focused.

“I believe the government should get all the relevant government ministries and agencies and CBN, Bank of agriculture, bank of industry and the Nigerian Agric Business Group (NABG), to work together and work out a national agricultural production plan.

“Besides, government should remain consistent with its agricultural policies and substitution of imports with locally grown produce,” Dangote said.

Speaking further, Dangote called on Nigerian youths and graduates to explore opportunities in the sector, adding that if agric is seen as business, the high level of unemployment in the country would be addressed.

“Nigeria youths and graduates should look at agriculture in its total supply chain. There are many innovative ideas they can explore and engage in to get substantial income. From technology, IT, Logistics, marketing, distribution, inputs supply, markets research, irrigation systems supply and also quality assurance,” Dangote stated.

The immediate past President, Chartered Institute of Bankers’ of Nigeria, Dr. Uche Olowu, said opportunities in the agricultural sector should be explored to improve the country’s capacity to export agric products. Olowu, said the country has so much to gain by investing in agriculture, which will boost foreign reserves.

Olowu added that access to credit is also a key factor that will lead to economic growth and development.

To an economist and lead consultant to ECOWAS, Prof. Ken Ife, the reason why the CBN has over the years been emphasising that we, “produce what you eat and eat what you produce,’ was actually from a perspective of demand management.

However, he stated that presently, the economy is facing a supply shock from China that transmitted to the United States, Europe and Africa. This, he said, meant that many of manufacturers in the country couldn’t get their raw materials, which also meant that many of the retailers couldn’t get their products to sell. So, that translated to demand shock and unemployment.

“Can you imagine that if we didn’t take the action we took on rice and we were having to import those huge volume of rice, how would Nigeria have faced the prospect that they are going to refuse to be selling rice to Nigeria?” he wondered.

Also, the Vice President, Nigeria Agribusiness Group, Dr. Emmanuel Ijewere, disclosed that Nigerian famers produced at least 130 per cent of what was being consumed in the country, due to the agric intervention schemes.

“What we experienced in the last few months, has simply confirmed our position that we can feed ourselves. Even before the lockdown, local farmers have been consistent in producing at least 130 per cent of what we consume in the country.

“The sector has the capacity, not only to feed Nigerians but to lift the economy,” Ijewere added.

However, the Vice Chairman, All Farmers Association of Nigeria (AFAN), Babafemi Oke, was of the opinion that the closure of borders also contributed largely to the success of the sector in recent time. According to him, border closure for almost a year before the lockdown gave local farmers advantage to explore the market and increased output.

On his part, the Chief Executive Officer, BIC Consultancy Services, Dr. Boniface Chizea, said the pandemic has made the world, “shed all pretenses to globalisation, as all countries of the world, without exception, have their sights and attention focused inwards with all manner of restrictions on exports of various goods and services to logically cater for crises on the home front.”