In a bid to mitigate the impact of the novel coronavirus on micro, small and medium-sized businesses (MSMEs), the Central Bank of Nigeria recently unveiled a 50 billion credit facility and cut down interest rate on intervention funds from nine to five percent among other measures to support businesses.
Stakeholders in the agricultural sector have lauded the step by the apex bank to help agribusinesses survive in this difficult moment of the economic fallout of the COVID-19 pandemic, but say that much more still needs to be done to support businesses amid the pandemic.
Agriculture which has long been known to hold a great promise in terms of job creation and poverty reduction remains the most critical sector for economic recovery post-Covid-19.
Since the outbreak of the novel coronavirus, many agribusinesses and farmers in Nigeria are feeling the heat as both local and global export supply chain has been grounded on suspended freight.
Also, the rise in the prices of major inputs for production amid low demand triggered by consumers falling income has added to the pressure on agribusinesses.
“It is a good initiative by the apex bank but we would want the reduced interest rate to remain the same post-COVID-19,” AfricanFarmer Mogaji, head-agribusiness group, Lagos Chamber of Commerce and Industry (LCCI) said in a phone response to questions.
“Agric is long term and whatever support the apex bank is providing must also be long term,” Mogaji who is also the chief executive officer of FarmCredit said.
He stated that the country currently does not have any option than to fully diversify through agriculture especially in a period of the pandemic that has triggered low oil price and FX volatility.
Mogaji says that the palliative measures to support agribusinesses will help increase the production of food in the country as farmers and other actors across the value chain will be encouraged.
He said that accessing the N50billion credit facility will remain a big challenge to most small businesses, saying that the apex bank must ensure that SMEs are the ones accessing the fund and not politicised as usual.
Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN) said that the agricultural sector remains the most critical for the country’s economic growth especially amid the coronavirus, low oil price, and FX volatility.
“The CBN’s support is very crucial at this time and we must commend them for the recent reduction of interest rate on intervention funds from nine to five percent but this support has to be ongoing,” Kabiru said.
He noted that thousands of smallholders under the CBN’s intervention programmes will benefit from the recent cut and this will further impact their production capacity greatly.
He also noted that the problem with the stimulus packages to support businesses by the apex bank is the implementation, saying that most previous intervention facilities similar to this never get to the operators of small businesses but usually hijacked by politicians for their selfish interest.
He stated that if there is transparency in the disbursement of the funds, then it would be the best thing the government has done in ensuring that businesses are supported in an adverse period like this.
However, as the apex bank continues to roll out palliative policies for the various businesses, there are questions around how the businesses will manage especially agribusinesses that engage actively in wholesale and retail trade.
There are concerns about currency stability and disruption to global supply chains remains critical.
Currently, the fall in oil prices is further pushing the Federal Government to think up other ways to raise revenue besides depending on the monthly crude oil sales.
This is the second time Nigeria has been in a similar situation within a decade. In 2016, oil prices bottomed, pushing the economy into its first recession in 25years.
The government promised then to diversify the economy through agriculture and reduce its dependency on oil.
But official figures show that not much progress has been made as agriculture exports still account for less than two percent of the country’s total export while oil export still accounts for a dominant share.
Currently, thousands of metric tons of cocoa, cashew are being stocked- piled in warehouses across the country, an indication that the country’s revenue from non-oil will be greatly impacted.
The CBN through the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance bank has already commenced the disbursement of the N50billion targeted credit facility to businesses selected as beneficiaries.
