by Bayo Adeyinka
‘If I dreamt five years ago that I would invest in Agriculture, I will write it off as bad dream or nightmare but today, we’re investing $2.3 billion in Agriculture, $2 billion in sugar, and $300 million in rice. In Nigeria, we have one of the most attractive investment policies through framework that the government has put in place to help businesses succeed”
– Aliko Dangote
On August 1 last year, I embarked on a journey to two towns tucked away in Osun State. My visit which was in the tour of duty was to witness first hand the success of the efforts by the Federal Government to re-position agriculture in the scheme of things.
Firstly, I went to Ikire where I spent quite some time on a farm consisting of a poultry of about 20,000 birds, a 14-pond fish farm, about a hundred goats and rams and a feed mill. The same owner took me to another town a few miles away called Wasimi where I saw a palm oil mill erected in the middle of a huge oil palm plantation.
In September of the same year, I was in Uromi, Edo State where I visited another farm. This time, it was a cassava farm interspersed with pawpaw trees. I had never been to such a huge farm in my life as we kept on driving through the huge cassava stalks. In another part of the town, I visited another farm which consists of a mango plantation, an oil palm plantation, a piggery and a herd of about 200 cows- all in one location. That particular farm employed about 150 people, most of who lived on that farm.
Something interesting linked the two incidents: they are both success stories of the silently growing agricultural revolution engineered by the Jonathan government. With several agricultural development programmes designed to generate employment opportunities, alleviate food insecurity, encourage agro-industrialization and improve entrepreneurship through capacity building, several hundreds of farmers are taking advantage of these lending schemes.
THE FOUR AGRIC SCHEMES
As an operator within the system, let me just give a quick brief of the agricultural lending schemes.
The Agricultural Credit Guarantee Scheme Fund (ACGSF) is targeted at Small Scale Farmers (Individual Farmers, Cooperative Societies, and Corporate Organizations) and provides loans between N1m to N10m. With a tenor of 24 months maximum ( strictly related to the gestation period of the project being financed, inclusive of moratorium), it can be used for cultivation of Crops, Tubers and Fruits (cotton, beans, groundnuts, sheanuts, benniseed, pine-apples, bananas, plantains), Animal Husbandry (poultry, piggery, cattle rearing, fish farming), Processing and Value Addition (e.g. cassava to garri, oil palm fruit to oil and kernel, ground nut to ground nut oil), Farm Machinery and Hire Services. While loans under this ACGSF scheme are given by commercial banks, they are guaranteed by CBN up to a limit of 75% in case of default or loss. Furthermore, customers that repay their loans as at when due can enjoy the benefit of 40% interest rebate under the Interest Drawback Programme (IDP). Implication of this is that if you have serviced the facility well and you were charged a total interest of-say for example N1m – the CBN will pay N400,000 back to you under the IDP.
Then there’s the Commercial Agriculture Credit Scheme (CACS) which is targeted at Large Scale Commercial Agricultural Value Chain (Corporate and Large Scale Commercial Farms, Medium Scale Commercial Farms, State Governments). The loan amount under this scheme is between N21m to N2b. It can be used for Production (cash crops, food crops, poultry, livestock, aquaculture), Processing (feed mills development, threshing, pulverization, other forms of transmutation for value addition), Storage (commodities and agro-chemicals), Farm Input Supplies (fertilizers, seed/seedlings, breeder stock, feeds, farm equipments and machineries) and the tenor is between 2-4 years. What is interesting about this scheme is that the CBN provides this fund at 0% and commercial banks through which the funds are disbursed are allowed to charge a nominal rate (often not more than 500 basis points) on it. I know customers who enjoy this scheme. In addition, each state government can borrow up to N1 billion for on-lending to farmers’ cooperative societies and other areas of agricultural development provided such initiatives/interventions are in line with the objectives of CACS.
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) caters for the agricultural value chain under 6 broad categories: preparation and infrastructure, inputs, planting/breeding, nurturing and harvesting, storage and post-handling, Processing and distribution. Under the scheme, farmers can borrow between N5m to N2b. The customer purchases a Credit Risk Guarantee which qualifies borrower for cover and interest drawback programme. NIRSAL is broader in scope than CACS and ACGSF. The Credit Risk Guarantee is similar to what obtains in some developed countries ( such as under the Canada Small Business Financing Program (CSBF), Portugal Mutual Counter- Guarantee Fund and Small Business Development Fund (SBDF) of Slovenia.
Finally, there is the Growth Enhancement Scheme (GES) which is basically for financing working capital requirements for agro-dealers (fertilizers and seeds) and provides for amounts between N5m to N300m. Uganda is set to adopt the Growth Enhancement Scheme(G.E.S), seeing the impacts it has had on the Nigerian agriculture sector.
WHO BENEFITED FROM THE SCHEMES?
Are people actually benefiting from these schemes? The Central Bank of Nigeria (CBN) has put the total amount disbursed to beneficiaries under the Commercial Agriculture Credit Scheme (CACS) as at the end of the first quarter 2014 at N228.093 billion. The central bank disclosed this in its Development Finance Department (DFD) report for January- March 2014. According to the report, the amount was utilised for 299 projects.
“From inception in 2009 to March 2014, 165,510 jobs were created; two out of the 269 private projects are owned and managed by women,” it explained.
29 State Governments have accessed N33b under the CACS scheme including Anambra, Enugu, Rivers, Gombe, Sokoto, Bauchi, Niger, Bayelsa, Adamawa, Kebbi, Taraba, Imo, Kwara, Osun and Ekiti among others.
The distribution of the performance of CACS as at June 30, 2012, by number of projects financed in the six geo-political regions of Nigeria revealed that the Southwest region had the highest number of projects or 45.2 per cent of the total. This was followed by the Northwest region which recorded 46 projects or 18.4 per cent of all the projects. The North central was next with 32 projects which constituted 12.8 per cent. Others were the Southsouth with 25 projects (10 per cent), the South-east with 23 projects (9.2%) and finally the North-east region which had 11 projects (4.4 per cent).
In a report in Daily Trust, Kano State Government admitted that the farmers in the state “benefited from federal government’s agricultural interventions in three fold since 2011. The first was the N1 billion Central Bank of Nigerian’s loan under the commercial agriculture development project of the apex bank. The second fold of the agriculture loan benefited by Kano was that from the N2 billion agriculture loan under the Commercial Agriculture Credit Scheme initiated by the federal government where farmers in the state accessed loans for commercial agricultural purposes”
In February 2014, LAPO (Lift Above Poverty Organization) reported that the Central Bank of Nigeria (CBN) granted 354 clients of LAPO a total rebate of two million naira for successfully repaying insured agricultural loans accessed from the microfinance bank under the Agricultural Credit Guarantee Scheme Fund (ACGSF).
THE RICE TRANSFORMATION AGENDA
Abakaliki rice mill cluster in Ebonyi state had up to 450 millers with about 4,560 small scale milling machine working together to process quality rice. Nigeria produced 2.9 million metric tons of paddy rice (a 1.5 million jump from 2012). Read all about it here.
A major foreign investor, Dominion Rice, has also come into the country and is investing $40 million in a 30,000-hectare commercial rice farm with international grade rice mill in Taraba. In Kogi State, over 7,000 hectares have been cultivated in the dry season, the first ever in the history of the state. Governor Idris Wada said that employment has been created in the state via the transformation in agriculture by the Jonathan administration. Wada said, “We are in rice because of the agricultural transformation agenda of the Federal Government. We are overwhelmed. Every day we hear women crying, ‘We want land; we want land.’ We hear young people crying for land. So we had to hire more earth moving equipment to clear more land to allocate for them for rice production.”
Governor Saidu Dakingari of Kebbi State is of the opinion that the dry season support for rice farmers is the best thing to have happened in the sector in the past 40 years. He said jobs would be created because of that singular move. Dakingari also said that in a matter of months Nigeria would be among the major exporters of rice, and that would mean more foreign earnings for the country. Read him: “The growth enhancement support scheme of the Federal Government in partnership with the state and in particular the dry season support for the rice farmers has transformed rice production. For 400-500 km, all you will see is paddy of rice in production. Such is the power of the massive change we are witnessing.”
The largest integrated rice processing mill in Africa was commissioned by Goodluck Jonathan in Rukuba, Nassarawa State in July 2014.
Dangote has acquired farmland in Edo, Jigawa, Kebbi, Kwara, and Niger states totalling 150,000 hectares to be used for the commercial production of rice paddy. This will create thousands of jobs for Nigerians and boost food security. To this end, he has invested $1b into commercial rice farming. “With this installed capacity, the project will become the largest integrated rice mill in Africa,” Dangote said.
THE BUSINESS OF AGRICULTURE
Time will fail me to write about the new cargo airports for goods, the network of silos around the country with a 100,000 metric ton silo commissioned in Kwali Local Government area of the FCT recently, the $30m Dangote tomato paste processing plant in Kano, the juice processing plant in Makurdi by Tony Elumelu, the 15,000ha cassava-processing project in Kogi State being set up by commodity trader Cargill, the electronic warehousing facility set up by African Exchange to link farmers with the Exchange, the set-up and inauguration of agricultural equipments hiring Centres across the nation (4 Centres in operation at the moment in Zamfara State with 20 tractors, power tillers, harvesters and planters, among other modern farm machinery in each centre- and 1,200 Centres to be set up around the country eventually), the reduction in import quota for fish importation which encouraged local farming of fish and brought about a reduction in prices of fish and other giant strides embarked upon by this administration including how the 40-year old perennial fertilizer scam was finally clipped.