• Saturday, May 18, 2024
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BusinessDay

Agric sector loans drop to lowest in two years

Agric sector loans drop to lowest in two years

The agriculture sector, a major contributor to Nigeria’s Gross Domestic Product, received its lowest amount of credit in at least two years, according to official data compiled by BusinessDay.

The data from the Central Bank of Nigeria (CBN) shows that out of the total credit of N39.1 trillion allocated to agriculture, industry and services sectors by other depository corporations (ODCs) in the third quarter of last year, agriculture got the least of 4.69 percent, down from 4.91 percent in Q2 and 5.88 percent in Q3 2022.

In terms of value, the agricultural sector received N1.83 trillion in Q3, down from N1.84 trillion in the previous quarter.

“Total credit extended to key sectors of the economy by ODCs increased by 4.3 percent to N39.1 trillion in Q3, compared with the N37.5 trillion in the preceding quarter, reflecting efforts to boost economic growth and create jobs,” the report said.

It said credit to the agricultural sector, however, declined marginally by 0.4 percent.

“In terms of share in total credit extended to key sectors during the quarter, the services sector remained the dominant recipient, accounting for 52.3 percent. The industry sector followed closely with 43.0 percent, while agriculture accounted for the remaining 4.7 percent,” it added.

The sector had the least credit allocation because CBN suspended the Anchor Borrowers Programme, said Ibrahim Kabiru, national president of the All Farmers Association of Nigeria.

“Many loans were not utilised accordingly and so the CBN stepped in by making policies to guide the sector from misappropriations. The bank saw that it was a bad investment as many of the loans were not getting to the right quarters,” he added.

Bolade Agboola, an energy and consumer growth analyst at Chapel Hill Denham, said the CBN saw that the intervention was not getting to the right farmers, so policies were put in place to curb corruption in the sector and get results from previously allocated credits.

“Looking at the recent GDP report for Q4, we see that the agricultural sector’s contribution to GDP reduced compared to other quarters. This means credit allocation affects the sector,” Agboola said.

Last year, the sector contributed 25.18 percent to the overall GDP, a decline from 25.58 percent in 2022. In terms of growth rate, the sector slowed to 1.13 percent from 1.88 percent.

Food inflation, which constitutes more than 50 percent of headline inflation, rose for the 14th straight time to 37.92 percent in February this year.

The World Bank’s latest Nigeria Development Update report revealed that rising inflation and sluggish growth in Africa’s most populous economy increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year.

This means that from January to November, an additional 14.2 million people fell into poverty.

A recent report by SBM Intelligence, an Africa-focused geopolitical research firm, showed that farmers in the North-West region paid N139.5 million to bandits as levies within a period of four years (2020-2023).

It said a total of N224.9 million was imposed by the bandits and that farmers paid levies before they could access their farmlands.

“All these make things difficult for those who depend on agriculture for their livelihood and worsen food availability and affordability in the country. Across the North in the past four years, militants have made a fortune through various levies imposed on agrarian communities running into millions, which have exacerbated food insecurity and made people poorer,” the report said.

It said the rise in banditry and armed attacks has disrupted livelihoods and essential service distribution across the Northwest region such as Kaduna, Katsina, Zamfara, and parts of Jigawa.

“For farmers in these areas, working on their farms poses a dual risk: either they attempt to harvest their crops with hopes of earning a living, or they pay hefty ransoms to save themselves from abductors,” the report added.

An outlook report by the Food and Agricultural Organization, World Food Program, and others projected that Nigeria and other countries across the West Africa region are expected to see increased prices of staple foods such as rice, maize, millet, and cereals, among others, in 2024.

“Staple prices currently remain above the five-year average across the region. This is attributable to a combination of factors including production deficits, trade restrictions, insecurity in the Sahel, elevated global prices, high transaction costs, and currency depreciation in the coastal countries of the Gulf of Guinea,” it said.