Wednesday, 2 April 2014

N200 billion Agricultural Loan still to be disbursed after ten years


More than ten years after the Federal Government headed by late President Umaru Musa Yar’adua introduced a N200 billion Commercial Agriculture Credit Scheme in 2009 for farmers as part of the seven-point agenda of the administration to enable them increase food supply through improved farm production, questions are still being asked about the fate of the programme.
Agreements were signed with two international agencies namely the International Funds for Agricultural Development (IFAD) and the United States African Development Foundation to provide about $40 million to support the implementation of Rural Financing Institutions Building Programmes (RUFIN) and the funds were to be disbursed to farmers under the Commercial Agricultural Credit Scheme (CACS).
Introducing the credit scheme was part of Federal Government's response to the global economic recession which had devastating effects on food production and agricultural development in Nigeria and other parts of the world during the period.
The scheme, which was floated as a bond by the Debt Management Office (DMO) with technical assistance from the Central Bank of Nigeria (CBN) was to be administered by the United Bank for Africa (UBA) in conjunction with the First Bank of Nigeria (FBN) to provide farmers with necessary funds to enable them exploit the vast potentials in the nation’s agricultural sector.
It was also meant to lower the cost of agricultural production, create surplus farm products for export, apart from increasing the nation’s foreign earnings by diversifying Nigeria’s revenue base making it less dependent on oil.
Investigations showed that other direct beneficiaries listed for the facility were seventy micro-finance banks, seventy non-banking micro finance institutions, the Central Bank of Nigeria (CBN), the Nigerian Agricultural Cooperative and Rural Development Bank, apart from research institutions dealing with agriculture related activities.
It was gathered that large scale integrated commercial farms and agro-allied enterprises, with assets of between N350million and the capacity to increase such assets to N500million in a short period were targeted as initial beneficiaries in the scheme and non-integrated commercial farms or agricultural enterprises with less than N200million assets were to be the second preferred beneficiaries.
State governments and the Federal Capital Territory (FCT) Administration were also encouraged to borrow up to 20% from the bond for onward lending to farmers through specialized agricultural agencies.
The scheme targeted the following agricultural commodities as products that would be financed. The products include rice, cassava, cotton, oil palm, wheat, rubber, sugar cane, jatropha carcus, fruits and vegetables; all aspects of livestock including dairy, poultry, piggery and fisheries. The targeted commodities were marked for increased cultivation, processing, storage and marketing.
At the take-off point of the scheme, a Project Management Committee (PMC) composed of Central Bank of Nigeria (CBN) officers, the Executive Director of the National Food Security Agency (NFSA), personnel of the Federal Ministry of Finance (FMF), the Debt Management Office (DMO) and representatives of farmers associations were nominated to supervise the disbursement of the fund.
The scheme was highly commended by farmers, CSO, economists and other concerned Nigerians as a positive development especially because it came at a period when the world was experiencing economic recession, draught and acute food shortages.
Many Nigerians lauded the scheme because it was hoped the funds would help resolve the challenges facing the nation’s agriculture sector that were created by dearth of finance, absence of modern storage facilities, poor marketing and declining interest of the youth population in agriculture.
Before the N200 billion Commercial Agriculture Credit Scheme was introduced, there had been previous agricultural intervention initiatives that were introduced but failed to tackle the challenges of the sector and ended up being poorly implemented or were shackled by bureaucratic bottlenecks.
Tracking the N200 billion Commercial Agriculture Credit Scheme and farmers who benefitted directly or indirectly from the scheme since 2009 can be compared to searching for water in the Sahara Desert or along the road that leads to nowhere.
Farmers who spoke about the scheme said it was very surprising that more than ten years after the Commercial Agriculture Credit Scheme was introduced, no one has been able to access the Fund for any meaningful project. 
The farmers equally questioned the rationale of behind the government's decision to domicile the fund in only two banks and wondered what will happen to farmers who are presently not doing business with either of the banks or those who are resident in rural areas where the two banks may not have branches.
Respondents, such as the Manager of Omo Farms in Kiyi-Kuje, Mr. Omobolaji Usene,  pointed out that restricting the scheme to few commodities and just two banks have created serious problems of access already, stressing that it would have been better for the facility to be spread among all the banks to encourage access especially to grassroots farmers.
He said that farmers of commodities such as cocoa, groundnut and gum Arabic and local farm crops were placed at a disadvantage by the restriction adding also that leaving the funds in the hands of two banks only did not make the scheme competitive and will not help the government achieve its long term objective.
The poultry owner argued also that the Federation of Agricultural Commodity Associations of Nigeria (FACAN) and the All Farmers Association of Nigeria (AFAN) should have been included as members of  the two committees constituted to disburse the loans based on their knowledge of the real small holder farmers who constitute more than 80% of all farm holdings in the country and  are actually engaged in rural farming as opposed to political farmers who were listed as the majority in the schedule of applicants for the loan.
Another medium scale farmer, Alhaji Adamu Sale Ubandoma of AL-Salmanu Agricultural Farms also in Kiyi-Kuje pointed out that when the two foreign agencies provided the grants, Dr Sayyadi Ruma, who was then the Minister of Agriculture and Water Resources, assured the nation that there will be no discrimination in the disbursement of the money.
He pointed out that Adamawa, Bauchi, Katsina, Zamfara, Nasarawa, Lagos, Oyo, Benue, Anambra, Imo, Akwa-Ibom and Edo states were listed as the experimental states for the initially disbursement of the loan. Within them, about 345,000 households spread across the states including 138,000 family units headed by women were targeted as would-be beneficiaries from the programme but the farmer remarked that even in those states, the scheme has not made the desired impact because farmers were yet to get one kobo from the banks.
Alhaji Ubandoma regretted that the funds have not been received by the farmers since 2009 because the N200 billion agricultural funds promised by the Central Bank of Nigeria and the Federal Government have not been disbursed due to controversies on guidelines and the banks listed to handle the scheme.
The farmer called on the Federal Government to compel Nigerian banks to make lending money to farmers their first priority recalling that even the former Governor of the Central Bank of Nigeria (CBN), Alhaji Sanusi Lamido Sanusi, expressed displeasure while in office over the financial system in Nigeria and other sub-Saharan African countries which have not created the enabling environment for commercial banks to develop the capacity, the will and resources to finance the expected exponential growth in the agricultural sector.
He agreed with the former governor that Nigeria required evolving strategies for long term financing of the agricultural sector in the form of bonds, debentures and venture capital funds among others.
Alhaji Ubandoma remarked that there should be long term financial options for Nigerian farmers and entrepreneurs to invest in agricultural equipment and enhance their food production expressing lack of confidence in the N200 billion Commercial Agriculture Credit Scheme, which he claimed, has been cornered by politicians masquerading as farmers.
The medium scale farmer faulted the claims by the Managing Director of the Nigerian Agricultural, Cooperative and Rural Development Bank (NACRDB), Alhaji Babale Umaru Girei, at a recent public function that the bank has disbursed about N38.5 billion to finance various agricultural activities nationwide, saying that the nation would require proof of the disbursement and enough evidence that the beneficiaries were actual farmers.
Meanwhile, farmers operating under the aegis of Goshen Potato Farmers Co-operative said their efforts to access the Commercial Agricultural Credit Scheme have been thwarted by stringent conditions which, they said, the Federal Government must review to make borrowing attractive to farmers.
The farmers complained that their efforts to access the credit scheme were frustrated by banks unwillingness to co-operate and relax stiff lending conditions.
Spokesman of the farmers, Chief Dan Okafor, told newsmen in Abuja that the group went to other banks for soft loans to no effect after the two principal finance institutions operating the credit scheme refused them access to the facility.
He said the loan applicants were told that only N40 billion was set aside for small scale farmers and that the Central Bank of Nigeria (CBN) has not permitted or authorized banks to start disbursing the money to small scale farmers until approved guidelines are published.
“The Federal Government should do something if they really have us farmers in their heart,” he said, pointing out that the association has members who own large farms with enough capacity to feed the entire nation at Mararaba, Nyanya and other parts of the federation.
Chief Dan Okafor appealed to the Federal Government to review its agricultural policy especially as it affects the provision of adequate financial resources for food production, saying that the promise to provide credit facilities to commercial agriculture enterprises at single digit interest rates to enhance national food security has become a mirage and has failed like other previous policies.
He remarked that the success of the drive to attain food security and economic development must be premised on good agricultural policies backed by adequate financial cover rather than over-dependence on oil revenue like the nation has continued to do today.
The farmer warned that food scarcity, the challenges of hunger and poverty hovers on the country since many Nigerians in the north east and the north central geo-political zones who are rural peasant farmers have not planted any crop in the past two years following insurgency and displacements caused by internal conflicts.
“Many of these farmers are now struggling to get sufficient food for survival because many of them have been dislocated from their ancestral homes and farmsteads and do not feel safe engaging in farming to provide nutritious foods to meet the dietary needs of their families and the nation,” he concluded.
Already, the National Economic Council (NEC) has tried to intervene in the allegations and counter-allegation between farmers and banks over the disbursement of the N200 billion loan facility.
The council at its last monthly meeting in Abuja delivered biting criticism of the nation's banking sector, blaming the banks for the inability of the Federal Government to disburse the N200 billion agricultural credit loans meant for small and medium scale farmers.
Addressing State House correspondents, after the NEC monthly meeting at the Presidential Villa, Abuja, Chief Rotimi Amaechi, Governor of Rivers State, assisted by Alhaji Murtala Nyanko, Governor of Adamawa State, said out of N200 billion, only N70 billion was allegedly disbursed to unknown farmers.
The governors said the banks holding the funds have made it practically impossible for real farmers to access the loan despite efforts by the states to guarantee the agricultural credit facilities.
"N70billion has been allegedly disbursed. What happened to the remaining N130 billion. A lot of problems are emanating from the banks as most states are not able to access the funds for one reason or the other and that is why a committee has been set up to look at what the problems are and how to find a solution to ensure that forthwith, we are moving forward to achieve the objective of food security," the governors said.
Six state governors were mandated to form the committee to be chaired by former Central Bank Governor, Alhaji Sanusi Lamido Sanusi, with the ministers of finance and agriculture as members. The committee, the governors said, was mandated to work out modalities for easy disbursement of the credit to the respective beneficiaries.
At the Federal Ministry of Agriculture, the Director of Press and Information, Mr. Tony Ohaegbu declared that all the disagreement and quarrels about the disbursement of the agricultural funds were unnecessary because a sizeable number of farmers have accessed the funds.
“It’s not true but I will get back to you when I get the director of special services so that we can both talk to you on the scheme. I know that the money made available to farmers was less than one percent of the total amount but wait until I am able to get the officer in charge and we would both talk to you,” he said, after noticing that our correspondent was recording the conversation.



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