Capital Funding, a great challenge for Agriculture, writes Engr. Olagbaju Akeju, former FMAFS director

The lack of Capital funding in agricultural systems is a systemic failure arising from continuous distortion of Agriculture funding. 

That distorted funding is the main reason we had spent over N3 trillion in agriculture in the last 10 years on imported N2 trillion food.

The problem is not lack of money. The problem is many taps pouring water into the same bucket with leakages.

In Nigeria today, there is:

- Central Bank of Nigeria (CBN) promoting the Anchor Borrowers Program (ABP) as well as the Agricultural Credit Guarantee Scheme (ACGS)

Nigerian Incentive Risk Sharing System for Agricultural Lending (NIRSAL)

- Bank of Agriculture (BoA)

- State Agricultural Development Programs (ADPs)

- World Bank Rural Agricultural and Marketing Program (RAAMP)

-  FADAMA

- Donor funds — International Fund for Agricultural Development (IFAD), African Development Bank (AfDB)

- Fertilizer subsidy

All with different interest rates: 0%, 5%, 9%, 18%, 28%, and in different forms and concerns towards the same goals, targeting farmers with no single database to verify. And this is the biggest challenge facing my immediate constituency, the All Farmers Association of Nigeria (AFAN)

The result is obvious: continued disjointed, duplicated, distorted, and diverted funds aimed at Agriculture. Can we really fix it ?. Yes,  if we are committed. It is not a rocket science issue. Other Countries are doing it. Even our immediate neighbours Benin, Togo,Ghana and Cote d'ivoire had reformed Agricultural funding. 

 What we need to do, and AFAN should  be part of the process  

 -One National Farmer Registry with farmers assigned a unique ID code.

 -One Funding Gateway approved by the Federal Government  and supervised by CBN

- Create a single National Agric Finance Portal with every farmer having a unique ID.

All money, whether from CBN, IFAD, Private Sector financial institutions, and other donor agencies, must pass through that portal.

A single e-voucher system must be developed for inputs and tied to milestones to cut ghost farmers.

 - Separate Agricultural funding from Politics because money and hunger do not know political parties. The practice where First Ladies in the Government implement different agendas is also a source of distortion in the Agri system because they are giving cash without a visible outcome which, as rightly observed, cannot be defended by the Ministry.

-Reform Agro- Marketing with a swipe code where inputs collected are offset and redeemed by the bank on confirmed redemption. 

The interest rate is still high from the commercial banks; I doubt if farmers,  and I mean genuine farmers, can survive on a 28% rate per annum. The Single digit has been on the table for a long time, and it must be harmonized and implemented in the Agri system.

Agric Finance Window can easily be tied to different crop cycles: 4 months for maize, 8 for rice, and 24 for poultry, etc. 

The debate on whether funding farmers directly is expedient is still inconclusive. Just a few days back on NTA, "Good Morning  Nigeria" focused on searching for an appropriate model that can deliver credit to farmers, and it was noted that funding the value chain is the best approach and could be a game changer.

This approach is related to the Anchor-led financing and the off-takers. 

Collateral Reform is urgently needed. Only the portfolio and big farmers can readily meet the current conditions, and this is to the detriment of small-scale farmers.

The options worth reviewing include :

Cooperative Group guarantee.

- Warehouse receipt   as collateral

- Crop insurance 

 One Monitoring System,  from disbursement to recovery, is clearly absent in Agri funding. What we have now is a  situation  where the

Ministry disburses, CBN and BoA claim success, and no one tracks yield, or a dashboard is created to monitor the utilisation. 

The Federal Government should reform the funding platform in this critical sector by eliminating duplication of different agencies with seemingly overlapping roles. 

I really look forward to a reform that will merge BoA, NIRSAL, and ACGS into one  National Agricultural Development Bank.

It is high time we depart from cash disbursement to smallholders. Let us fix input vouchers for any production support to Nigerian farmers through their  Cooperative organisation. The input voucher must also come with a target, so farmers who fail to meet the target may face the risk of not getting further support.