As part of efforts to create jobs and mitigate the impact of the economic fallout from the COVID-19 pandemic, the Central Bank of Nigeria (CBN) recently authorized commercial banks to give each up to N2billion maximum loan to youths interested in going into agriculture.
The loan, which comes under the Accelerated Agriculture Development Scheme (AADS) at five percent interest rate per annum was created by the apex bank in collaboration with state governments to engage 370,000 youth in agricultural production.
AADS, a private sector-led partnership, will help facilitate increased private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation, and economic diversification.
With the country’s annual population growth rate of about three percent, data shows that Nigeria’s population pyramid is bulging around the youth segment, with an estimated 75 percent of the population identified to be aged below 35 years.
According to experts in the agricultural sector, the intervention by the apex bank will help create jobs, hence, reduce youth restiveness in the country while boosting agro productivity.
The experts stated that the country will be able to create more jobs when there is a strong linkage between the agricultural and industrial sectors, noting that agro-industrialisation is vital for economic transformation.
They urged the apex bank to not only authorise banks to support youths with single-digit credits but should drive investments in modern technologies, stressing that youths would only find agriculture attractive when the sector becomes heavily mechanised and digitalized.
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“The sector needs funding, so giving single digit loans to youths interested in agriculture is a good development but we must invest in infrastructures to make their agribusinesses profitable,” Abiodun Olorundenro, manager, Aqua Shoots said.
“CBN must ensure that commercial banks comply with the directives and that its loans are accessed by the youths,” Olorundenro said.
He advised the government to address the issues of insecurity and banditry in the country to ensure that the youths carry out their agribusiness without any form of fear.
Africa’s biggest economy has an unemployment rate as of 2020 is 27.1 percent in the second quarter of 2020 – with 13.9 million youths unemployed, data from the country’s statistic office shows.
Nonetheless, Nigeria’s agricultural sector is making some progress. In real terms, the sector grew by 1.39 percent (year-on-year) in q3 2020, but this represents a decrease of 0.89 from the corresponding period of 2019.
Agricultural contribution to GDP rose to 30 percent in q3 2020, despite the country’s economy entered its second recession in five years.
A larger proportion of youths can become meaningfully employed and make living from agriculture when opportunities in the sector are adequately harnessed and given its potential to employ 70 percent of the country’s total workforce.
“Giving finance only to youths wouldn’t solve the problem. They need a conducive environment and technical assistance,” Ayodeji Balogun, chief executive officer, AFEX Nigeria said.
“The banks will still require collateral for the facility, which will make it not accessible by youths,” he added.
He says for growth in the sector to be sustained, the country’s agriculture must be technologically driven which youths are capable of spearheading.
Currently, numerous agri-tech businesses are owned and managed by youth entrepreneurs that are creating thousands of jobs and connecting smallholder farmers with finance.
With adequate access to finance, more innovative and tech-led businesses will be created by the youth as the country currently boost of a wave of fresh young talents.
Also speaking, Mohammed Sule, a watermelon farmer commended the apex bank for addressing issues of finance, especially for youths.
He noted that with the intervention youths will start embracing agriculture, saying that finance has always been the limiting factor for youth participation in the sector.
He added that the intervention will also help sustain youth agribusinesses that are already operational.
“It is a great initiative that will bring lots of youths into the sector,” he said.
He says credit to the sector has remained low as banks are unwilling to lend to agricultural players. But with CBN’s financing interventions for youths, the country will have an agricultural sector that strives, saying that the annual financing in the past has never benefitted the youths.
In the same vein, Fatai Afolabi, adviser- Plantation Owners Forum of Nigeria (POFON) and managing consultant, Foremost Development Services Limited said that coordinated interventions that are structured and have inclusive empowerment could help all sub-sectors of agriculture, especially when such designs and programmes are done with stakeholders, beneficiaries – such as the youths.
