The Central Bank of Nigeria (CBN), through the banks, has, between November and December 2021, disbursed a total of N927.94billion to over 4.5 million smallholder farmers cultivating 21 commodities across the country, under the Anchor Borrowers’ Programme (ABP).
In line with its developmental functions as enshrined in Section 31 of the CBN Act 2007, the CBN established the Anchor Borrowers’ Programme (ABP) to create economic linkages between smallholder farmers (SHFs) and reputable companies (anchors) involved in the production and processing of key agricultural commodities.
The core of the Programme is to provide loans (in kind and cash) to smallholder farmers to boost agricultural production, create jobs, reduce food import bill towards conservation of foreign reserve.
The CBN Governor, Godwin Emiefele, on assumption of second term office under the current administration of President Muhammadu Buhari, said said his vision would be to ensure that the Central Bank of Nigeria is more people-focused, as its policies and programmes would be geared towards supporting job creation, reducing the high level of Treasury Bill rates, improving access to credit for MSMEs, deepening our intervention programme in the Agricultural Sector, building a robust payment system infrastructure that will help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.
The banking sector regulator disbursed N75.99 billion to support the cultivation of over 383,000 hectares of maize, rice and wheat during the 2022 dry season.
Emefiele said all excess output aggregated from the financed farmers will be released to the Nigeria Commodity Exchange (NCX) to help moderate the prices of food in the market.
The apex bank also released N1.76 billion to finance two (2) large-scale agricultural projects under the Commercial Agriculture Credit Scheme (CACS).
Under Agri-Business/Small and Medium Enterprise Investment Scheme (AGMEIS), over 28,961 agribusiness and artisan projects have been financed across the country, 107,932 direct and indirect jobs created, and boost the productive capacity of the domestic equipment fabrication industry across the country.
AGSMEIS, which is an initiative of the Bankers’ Committee, was formally approved at its 331st meeting in 2017.
Chibuzo Nwosu, a former taxi driver, is a beneficiary of AGSMEIS (artisan and vocation). He testified: “I was a taxi driver before I got the TCF. After I received the money, my life changed. I have been able to use it to establish a block moulding business. I now pay my children’s school fees even before resumption of schools.”
Agriculture has remained a growth driver in Nigeria, although its rate of growth has declined consistently over time. The sector grew by 15.9 percent between 2000 and 2005, (although this high figure could be attributed to the huge growth recorded in 2002 (55.9 per cent), without which it would have grown at 6.0 per cent). Its growth however declined to 6.5 and 4.1 per cent within the period 2006-2010 and 2011 -2016 respectively. Similarly, the sector has remained dominant in the economy of Nigeria due, partly, to its contribution in value added to GDP and the share of the population employed within the sector which is put at about 50 percent of Nigerians. During the period 2000-2005, the sector contributed 36.3 percent of total value added to GDP. Its average contribution however, declined consistently over time to 31.7 percent in the period 2006-2010 and further down to 21.3 percent during the period 2011-2016. One of the objectives contained in most agricultural policies or programmes of the government has been to improve self-sufficiency of the nation, reduce share of imported food and encourage the export of agricultural commodities, according to a research work by the CBN.
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“At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market,” Emefiele said. Some of these products include, Cocoa, Groundnuts, Cotton and Palm-Oil.
“Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians. Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival,” he further said.
The CBN restricted access to foreign exchange on 43 items, while deploying its intervention funds to support growth and productivity in the agricultural and manufacturing sectors. “These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate, stability in our exchange rate and improved accretion to our external reserves,” he said.
According to the National Bureau of Statistics (NBS) in its latest Gross Domestic Product (GDP), the non-oil sector grew by 4.73 percent in real terms during the reference quarter (Q4 2021). This rate was higher by 3.05 percentage points compared to the rate recorded in the same quarter of 2020 and 0.71 percent lower than the third quarter of 2021.
This sector was driven in fourth quarter 2021 mainly by Agriculture (crop production); trade; Information and Communication (Telecommunication); and Financial and Insurance (Financial Institutions), accounting for positive GDP growth.
In real terms, the non-oil sector contributed 94.81 percent to the nation’s GDP in the fourth quarter of 2021, higher from the share recorded in the fourth quarter of 2020 which was 94.13 percent and higher than the third quarter of 2021 recorded as 92.51 percent. The annual contribution in 2021 was 92.76 percent, the NBS stated.
According to the GDP report, four sub-activities make up the Agricultural sector: Crop Production, Livestock, Forestry and Fishing. The sector grew by 12.86 percent year-on-year in nominal terms in Q4 2021, showing a fall of 1.17 percent points from the same quarter of 2020. Looking at the preceding quarter’s growth rate of 7.95 percent, there was an increase of 4.92 percentage points. Crop Production remained the major driver of the sector. This is evident as it accounts for 91.23 percent of overall nominal growth of the sector in the fourth quarter 2021.
Quarter on Quarter growth stood at -0.65 percentin fourth quarter 2021, while annual growth was at 10.43 percent in 2021. Agriculture contributed 24.17 percent to nominal GDP in the fourth quarter of 2021. This figure was lower than the rate recorded for the fourth quarter of 2020 and lower than the third quarter of 2021 which recorded 24.23 percent and 26.57 percent respectively.
Now, the war in Ukraine and sanctions on Russia are upending shipments and possibly production for two of the world’s largest agricultural producers, according to the International Monetary Fund (IMF).
The two countries account for nearly 30 percent of world wheat exports and 18 percent of corn, most of which is shipped through Black Sea ports that are now closed. Wheat futures traded in Chicago, the global benchmark, recently rose to a record.
Global food prices are poised to keep climbing even after jumping to a record in February, placing the heaviest burden on vulnerable populations while adding to headwinds for the global economic recovery.
Food commodity prices rose 23.1 percent last year, the fastest pace in more than a decade, according to inflation-adjusted figures from the United Nations Food and Agriculture Organization. February’s reading was the highest since 1961 for the gauge tracking prices for meat, dairy, cereals, oils, and sugar.
A new report by the IMF noted that Food costs account for 17 percent of consumer spending in advanced economies, but 40 percent in sub-Saharan Africa. Though this region is highly import-dependent for wheat, the grain constitutes only a minor share of the total caloric needs.
Taiwo Oyedele, head of tax and corporate advisory services at PwC, said the ongoing Russia-Ukraine conflict has added additional complexity and uncertainty to the economic mix which the monetary authorities have to contend with.
“We are already witnessing the impact by way of higher prices of major consumption items like fuel products, wheat and other grains and their by-products. However, given the expectation that the conflict will hopefully be temporary, I do not expect it to trigger a change in policy stance by the MPC in the short term,” he said.
