Farmers’ loan defaults show limits of intervention programmes

The failure of 70,000 Kebbi State farmers who benefitted from the Anchor Borrowers Programme (ABP) to repay about N17 billion extended to them by the Central Bank of Nigeria (CBN) has exposed the limitations of the Federal Government’s intervention programmes.

The government has resolved to take the defaulters to court as only 200 out of 70,000 farmers have been able to repay their loans.

The N17 billion accounts for about 10 percent of the total N174.43 billion the apex bank disbursed to farmers under the scheme since the initiative started in 2016, BusinessDay estimates show.

BusinessDay gathered authoritatively that many beneficiaries who got the ABP loans often saw the money as their own share of the national cake.

“Since I was born, I have not benefitted anything from the government until I took the Anchor Borrowers fund last year. I do not intend to pay back because it is my own benefit from the government as a Nigerian,” a farmer in Kebbi, who only gave his name as Ibrahim, said.

“We even heard that it was government assistance to farmers and we would not be paying back and now they want to collect the money after we voted for APC in the last election because of the money,” Ibrahim said.

Muhammed Augie, state chairman, Rice Farmers Association, Kebbi State chapter, said some farmers were made to understand, wrongly though, that it was a free gift.

“There was some mischievous information circulating when the loans were being disbursed that it was a free gift from the government and not a loan. As a result, many of the farmers are not willing to pay back,” Augie said.

Nigeria has had several good agricultural policies and programmes, but they have been marred by defaults, ethnic and religious colourations as well as political interference.

Nigeria once had an intervention programme known as the Cotton, Textile and Garment (CTG) Fund. It was targeted at funding textile firms in Nigeria and preventing massive closures of these companies. Olusegun Aganga, former minister of industry, trade and investment, said in 2013 that the fund had saved over 8,000 jobs.

However, after disbursing over 60 percent of the fund, many textile firms have shut down. Textile experts see the fund as a misplaced priority, as only about three full-fledged textile companies were in existence as of 2017, according to Grace Adereti, former president, Nigerian Textile Manufacturers Association of Nigerian (NTMAN).

“The major problem is not funding, but the influx of foreign textiles into the country. This is killing the industry. As at today, almost 80 percent of textiles in the country are imported or smuggled. Though they are still under ban, they are smuggled,” Jaiyeola Olarewaju, then director-general of NTMAN, told BusinessDay in 2013.

The Cassava Bread Fund set up by the immediate past administration is still domiciled with the Bank of Industry (BOI), but the fund is yet to achieve the purpose for which it was set up.

It was originally meant to produce bread with cassava flour in large quantity and increase cassava value chain as Nigeria remains world’s largest producer of the crop. But many farmers and manufacturers see the policy as a failure today as manufacturers still scramble for wheat flour rather than cassava flour. Reasons for the failure range from lack of cohesion among stakeholders to inability of farmers to produce High Quality Cassava Flour (HQCF) consistently, among others.

“The Trader Moni and Market Moni must be guided properly, otherwise they may suffer the same fate,” said Ike Ibeabuchi, CEO of MD Services Limited, which produces chemicals.

“I hear that, because it was distributed during a political season, some think it was an incentive to vote. I hope this kind of thinking will stop among our people,” he said.

He urged politicians to steer clear of intervention funds and allow professionals to handle all the processes to avoid it being misinterpreted.

“The need for proper education of beneficiaries is also key,” he said.

Since the inception of the Muhammadu Buhari administration, the Central Bank of Nigeria has taken over the role of the Bank of Agriculture in loan disbursement to farmers.

“We have very well written programmes over the years, including the Anchor Borrowers, which are very well defined, but when it comes to implementation we tend to go beyond the ambit of the objective of the policy or project and then go ahead to colour it with ethnic or political colouration which then undermines the integrity of the project,” said Kola Adebayo, a professor in the Department of Agricultural Extension Services, Federal University of Agriculture, Abeokuta.

“Two of the reasons microfinancing of agriculture has failed, whether it be the commercial banks funding or through intervention programmes, are lack of transparency and accountability,” Adebayo said.

He noted that majority of the beneficiaries are political farmers who take advantage of the loopholes created within the system to evade repayment.

Experts say that such high rate of loan default would have been prevented if the funds were disbursed through the relevant agricultural financial agency and farmers groups. Others stress the need to do better due diligence before disbursing such loans.

“If the loans were disbursed through the All Farmers Association, we would have been able to do something about it and ensure that farmers repay back,” Ibrahim Kabiru, president, All Farmers Association of Nigeria (AFAN), said.