Experts: Nigeria Must Review Agricultural Financing Architect to Curb Looming Food Crisis

Oluchi Chibuzor

Despite supporting the livelihood of over 10 million peasant farmers in the country and being a source of foreign exchange earnings, experts have reiterated the need for the country to review the financing of the agricultural sector in order to arrest the looming food insecurity facing the country.

This, they believed, becomes necessary considering  the fact that the various government development programmes have failed to reflect the present realities affecting the sector.

Delivering his lecture, yesterday at the 38th annual Omolayole Management Lecture with the theme, ‘Sustainable Development Of the Agricultural Sector for National Well-Being’, the CEO, Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said land tenure system, low level of irrigation forming, climate change, land degradation and low use of technology have impeded the agricultural sector.

He noted that there is a “public investment bias against agriculture and the rural areas in favour of urban centers”, adding that it covers infrastructure such as roads and electricity, low mechanisation of agriculture to weak irrigation system.

“We need to review our agricultural financing architecture to improve financing, of course there is a gap in the lending rate. The CBN just increased the MPR to 15.5 percent and am sure some people here are receiving notices from the banks for review of interest rates. 

Cash Reserve Ratio (CRR) was also increased; all of these things have significant implications for lending rate and of course the victims are the investors because you have taken the money. The lending rate, the general polity environment does not support adequately the real sector of the economy.

“Is not everybody that is getting intervention funds, so we need a financial system that actually supports the real sector of the economy so that we can reverse the trend where about 57 percent of our economy is in servicing. We need to do a lot more in the area of the production and servicing sector of the economy. Then the maturity profile of deposits and liabilities; these are the  funds available within the financial system where close to 80 percent of the funds are short-term funds. Again that is a major issue, because the banks rightly claim that the funding architecture is short-term funds therefore is not easy for them to lend long-term. You cannot use that type of funding to support agriculture.”

He expressed regrets at the state of the Bank of Agriculture and other research institutes that have not met their expected mission to the country.

“The Bank of Agriculture has not been functioning and practically collapsed and no serious efforts to revive it. There is a high rate of default on the loans that are already given, especially on the anchor borrower programme. All of these institutes were designed to strengthen productivity in agriculture.But sadly, most of them are now shadows of themselves. They are poorly funded, poorly staffed and poorly motivated.”

For him, it is important to enhance the resilience of people, communities and ecosystems which he stated as key to sustainable agriculture.

“Sustainable food and agriculture requires responsible and effective governance mechanisms, creation of strategic marketing boards and launch of sustained capacity development programs and reforming existing legislation and introduction of new laws especially on land ownership/tenure, water rights and farmer organizations. Provision of a favourable policy environment to enhance private sector investment in research for agriculture and food security e.g. tax holiday and favourable tariff regime on agricultural implements and other inputs.”

He posited that  high impact opportunities like

Research & development initiatives, accelerated mechanization and irrigation programs, use of drones, improved farming techniques and extension programmes must be embraced to  increase productivity.

“Quality of roads, the situation with our railway system, electricity supply to facilitate the spreading of the value chain especially with regard to processing, water supply, cost and to agricultural machinery. These contribute to high transaction costs and make our agricultural sector very uncompetitive.”

For the President and Chairman, Nigeria Employers’ Consultative Association (NECA), Mr. Taiwo Adeniyi, said agriculture remains a fundamental and critical sector in the development of the country, despite the recent upsurge in banditry in the North and some other areas.

“The insecurity has created impediments for farmers going to farm and harvesting their crops, the importance of Agriculture to our livelihood as a people has been further brought to the fore.

“Also, with the Russia war on Ukraine which has created a breach and disruption in the supply-chain of critical agricultural produce, especially wheat, the need for a sustainable National Policy on Agriculture has become more critical to the world at large. While the Government, through the Central Bank of Nigeria has taken some steps towards the development of Agriculture through the Anchor Borrowers’ scheme and the Backward Integration Programme, more is needed to be done to ensure food security.”

In her speech, the President Alumni of the International Association of Students in Economics and Commercial Sciences (AIESEC), Olubunmi Abejirin, said the hazy and uncertain economic outlook in Nigeria is giving significant cause for concern.

According to her, they include residual effects of the COVID-19 pandemic, tightening global financial conditions, high level of private, public and corporate debts with heightened risk, and rising inflation across several economies.

“More than ever, the decisions that policymakers and stakeholders in the entire food value chain make will have long-term consequences for the future of the world’s food systems and significantly impact national food security initiatives.

“This year’s lecture focuses on the sustainable development of Nigeria’s agricultural sector, food security, and national well-being. We must begin to have broader conversations on our preparedness for the looming food crisis and strategize on how to feed Nigeria’s 200m people; our discussions ranging, from agricultural markets, to trade flow,food waste  and  subsidies, among others.”

For the stakeholders present, the need for the Organised Private Sector “to ensure that Agricultural experts are appointed to key agricultural positions in the country as it is obtained in the health and Legal sector, remained sacrosanct.”