Fidelity Bank: Remarkable financing footprints in Agric sector value chain

Fidelity Bank Plc as one of the leading players in the Agribusiness and Non-Oil Exports banking space in Nigeria has expansive financing footprints in the critical value chain segments of the Agriculture sector.

Nigeria’s vast agricultural sector remains the largest employer of labour in Nigeria, employing more than 30 percent of the labour force, according to a 2020 PwC report.

Fidelity Bank Plc in recognition of the importance of staple foods like rice to Nigerians set out on a truly ambitious goal of funding the construction of an ultra-modern 16mt/hour rice-milling factory in Gundunwawa, Kano State.

Additionally, the bank has financed the construction and installation of several integrated rice mills across different geo-political zones in Nigeria. These rice mills have combined rice milling capacity in excess of 500,000 MT per annum, making a noteworthy contribution to the current 60 integrated mills with a combined capacity of over 3 million metric tons that were developed during this current administration.

Fidelity Bank facilitated the disbursement of over N34billion in direct credit to players in the value chain. This for instance helped to unlock financing opportunities for many paddy rice farmers and contributed significantly to the expansion of national paddy rice output.

With the rice value chain being a very critical area of interest for Fidelity Bank Plc, the bank has consolidated efforts with the government over the years. Between 2019 and 2021 alone, they availed over N21.3 billion in credits to businesses operating in the rice value chain.

This by the bank is certainly an impressive step in the right direction as Nigeria’s population is projected to reach 440 million by 2050, putting more pressure on available resources —food and employment opportunities.

Given the interconnectedness of the agricultural sector with other pillars of the Nigerian economy, Fidelity Bank’s intervention— and that of other private sector players— in the agricultural sector, strengthens not only this sector but extends to other sectors.

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Concerted efforts by private institutions like Fidelity Bank are helping to boost the rice value chain and to close widening food security gaps and provide employment opportunities to a significant number of the swathe of increasing labour force, from farmers to processors all the way to the last mile traders. Rice sufficiency status and improvements in competitive advantage will open the door for exports, especially in the light of the emerging African Continental Free Trade Area (AfCFTA).

As evidenced by Fidelity Bank’s efforts, private sector participation in the agricultural sector, with particular focus on the FMGs of agriculture, will serve to plug the current import drain in the country— a move that is beyond crucial to the nation’s growth.

It will further help to improve the price stability of agricultural produce— completely eradicating the alarming inflation rates that have plunged many Nigerians into extreme poverty over the past few years. Indeed, this participation is crucial to improving the economic capacity of the average Nigerian and that of the nation at large.

More than 80 percent of this number of Nigerian farmers is smallholder farmers that account for 90 percent of Nigeria’s agricultural produce. The share of agricultural contributions to GDP as of Q1 2020 stood at approximately 22percent.

Going by these thriving statistics, it would be expected that Nigeria’s agricultural sector would be self-sufficient. However, further statistics reveal that Nigeria’s cumulative agricultural imports between 2016 and 2019 stood at N3.35trillion, four times higher than the agricultural export of N803 billion in the same period.

A number of factors have been highlighted as some of the challenges of the Nigerian agricultural sector, one of which is the absence of value addition and supply-chain linkages. Nigeria mainly focuses on food production, often neglecting the manufacturing and processing aspects of the value chain, and the reasons are not farfetched.

Firstly, small-scale farmers are experiencing lack of access to finance. Although the Nigerian government has provided several methods of financing through the Central Bank of Nigeria, farmers still lack adequate access to finance. Lack of adequate financing is also inextricably linked to resource shortages.

Farmers lack basic farming essentials such as seedlings, fertilisers, irrigation and harvesting systems which hinders yield rates. Because of this, farmers are forced to depend on outdated agricultural systems, which lead to an insufficient supply to meet the population and food demand. Imports make up for the deficit, and the vicious cycle continues.

Despite the Government’s continued efforts to break this vicious cycle through empowerment schemes, it is evident that these efforts are insufficient to solve the unrelenting challenges of the agricultural sector.

This reveals an urgent need for private sector stakeholders in agriculture to work together towards growing Nigeria’s agriculture, diversifying from oil and gas dependency, encouraging agricultural industrialisation, and creating an enabling environment for Agribusiness to thrive.

Some private institutions, however, have been working arduously to make this a reality by making valuable contributions to Nigeria’s local productions. One of which is a forward-thinking financial institution, Fidelity Bank.

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