Agriculture presents a convincing avenue for Nigeria to boost exportation and improve GDP.
Hence, it’s no surprise almost every president of the country has established one initiative to make the sector work.
Problems hitting Nigerian agro businesses include financing, education, few government inclusions, etc.
These problems have seriously slowed the potential of the sector, especially expectations on agric commodity exportation.
Some of the schemes have been since 1970s till date, while others much recently.
Each providing unique solutions to the several problems affecting the sector.
The schemes come with their unique solutions, and their benefits are in different forms.
From access to funds, to access to agriculture inputs, all to make things work for the sector, and it’s players.
So onto the list.
#1 Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)
NIRSAL is a concerted USD500 Million effort of the public-private initiative.
Its purpose is to expedite the flow of finance and investments into fixed agricultural value chain.
The Central Bank of Nigeria launched the initiative in 2011 and incorporated in 2013
It aims to tackle key mitigating issues like:
- Low funding levels.
- Lack of understanding of the sector.
- Perceived high risks.
- Complex credit assessment processes.
- High transaction costs.
#2 AGSMEIS Loan for SME’S and Agricultural Businesses
It is a voluntary initiative of the bankers’ committee.
It is bankers support to the federal government’s efforts and policies towards promoting SMEs and agro-businesses.
Established in 2017, the initiative requires all banks to contribute 5% of their profits after tax annually to:
- Ensure SME’s and agro-businesses have access to funds.
- Strengthen the agricultural value chain(which includes production, inputs supply, storage, processing, marketing, logistics).
- Ensure sustainable agricultural practices.
- Boost managerial capacity of the SME’s
Eventually, the government sees this scheme as solution to, job creation, economic sustenance and development.
#3 The Anchor Borrowers’ Programme (ABP)
We once talked about the huge untapped opportunities in value added service like commodity processing.
The CBN created the ABP a bridge between processing companies, and small holder farmers of commodities needing processing.
The CBN in conjunction with state governments, and private sector groups, has distributed the cumulative sum of N55.526 billion since inception in November 2015.
Over 250,000 farmers who cultivated almost 300,000 hectares of farmland for rice, wheat, maize, cotton, soybeans, cassava, have all benefitted, according to reports.
The anchor companies provide inputs to help the farmers improve output.
After harvest, the anchor companies pay the equivalent of commodity supplied for processing to farmers.
#4 Accelerated Agricultural Development Scheme (AADS Loan)
The objective of this programme is to improve Nigeria youth participation in agriculture production across the country.
The government aims to engaging a minimum of 370,000 youth in the span of next three years.
This is to reduce unemployment amongst the youth, increasing agricultural production towards food security, job creation, and economic diversification.
#5 Presidential Fertilizer Initiative (PFI)
In a bid to improve trade balance, and GDP, there’s a need to boost output through the use of fertilizers.
According to reports, sub-Saharan Africa has the lowest use rate of fertilizers in the world with less than 9%.
Farmers have not been able to have access to fertilizers because they’re expensive. Government is tackling the issue through PFI.
The Nigerian Sovereign Investment Authority (NSIA) and the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) kick-started the PFI in December 2016 as the outcome of a partnership between the Governments of Nigeria and Morocco, and implemented as a Public-Private Partnership in Nigeria
PFI aims to revamp local blending of NPK Fertilizer in Nigeria.
It aims to achieve this by creating the enabling environment for the private sector to invest in local production.
Thereby shaking off the over-reliance on importing fertilizers when there’s enough capacity to produce locally.
#6 Agricultural Credit Support Scheme (ACSS)
The Scheme has a prescribed N50.0billion funding for farmers to:
- Explore the untapped potentials of Nigeria’s agricultural sector.
- Reduce inflation.
- Lower the cost of agricultural production (i. e. food items).
- Generate surplus for export.
- Increase Nigeria’s foreign earnings.
- Diversify its revenue.
To access this programme at national level, the scheme operates through a Central Implementation Committee (CIC).
Also, at the Federal Capital Territory (FCT) and State levels, the Scheme operates through State Implementation Committees institutes(SICs).
Participants are to go through the recognized farmers association to access the loan in banks while large scale farmers can apply directly as long as they follow the guidelines by the CBN.
Banks distribute the ACSS funds at a single-digit rate of 8%
However at inception, qualified applicants get loans at the rate of 14%, which will in turn be slashed by 6% to 8%, if diligent with repayment.
#7 Export Expansion Facility Program(EEFP)
The EEFP is a program under the National sustainability plan to cushion the effect of the COVID 19 pandemic, and drive economic growth in the short to medium term through export.
The EEFP aims to protect businesses from the effects of the pandemic, safeguard jobs, and reduce the risk of running business in the country from unforeseen shocks like COVID 19.
SME, MSME exporters, and those in the non-oil export sector stand to gain the most from this programme as government leans towards export growth to reduce the country’s vulnerability to sudden shocks like the pandemic.