N1.4trn anchor borrowers’ loan unpaid, IMF reports

By Onome Amuge

The International Monetary Fund (IMF) has disclosed that about N1.4 trillion or 76  per cent of the N1.9 trillion loans collected by farmers under the anchor borrowers’ programme (ABP) of the Central Bank of Nigeria (CBN) remain unpaid as at January 2023.

This disclosure was contained  in the IMF’s latest country report titled ‘Nigeria: Selected Issues’, prepared by a staff team of the fund as background documentation for the periodic consultation within the country.

According to the report, although the CBN allows farmers to pay in kind or cash under the ABP, repayments have been very low,especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.

The IMF identified  poorly targeted loan recipients, use of funding purposes unrelated to agriculture , weak incentive regarding repayment structure, among other factors for the high debt level.

The IMF said its cross-country analysis identified four levers for raising food security levels: raising per capita consumption, raising production yields, limiting food price inflation, and reducing reliance on food imports.

It said per capita consumption was far below comparator countries in Nigeria, and it could be stimulated through increased diversification.

The analysis also disclosed that yields were  lower in Nigeria than in other countries due to scarcity of inputs such as fertilizers, modern irrigation methods, and mechanisation.

It, therefore, encouraged Nigeria to address challenges hindering access to timely, high quality, and price competitive inputs, saying that this would not only achieve optimal productivity of agricultural outcomes but also temper food inflation.

The ABP was inaugurated by President Muhammadu Buhari on November 17, 2015. The scheme, according to Buhari, was established to create economic linkage between anchor companies involved in the processing of agricultural produce and small holder farmers of the required agricultural commodities.

The programme, facilitated and coordinated by the CBN was aimed at increasing banks’ financing to the agricultural sector and enhancing capacity utilisation of farmlands involved in the production of notable commodities. The policy documents of the programme also indicated that the ABP will boost agricultural lending to farmers and entrepreneurs, strengthen the value chain, reduce commodity importation, alleviate poverty among smallholder farmers, increase employment  rate and also, develop smallholder farmers to grow from subsistence production levels to commercial productivity.

The All Farmers Association of Nigeria (AFAN) noted that the credit from the CBN, disbursed through commercial banks and other windows were not readily available to the real farmers in many cases but hijacked by some officials who claim to be representatives of the farmers.  It added that the banks did not take inhibitors of production such as storage, post-harvest losses,transport risks and others into cognisance in the agricultural lending system.

Speaking on why many farmers have failed to repay the loans as expected,Isa Wanzam, a rice farmer and loan beneficiary in Kebbi State said when the funds were being disbursed to many of them (the farmers),  it wasn’t stated clearly to them that it was a loan. He added that they didn’t apply for the loan in the first place and It will be a difficult task for many of the farmers to repay the loan as not all of it was in monetary form as some farmers were offered farm implements which they considered as gifts or farming support aids from the government.

“We wouldn’t have collected anything had they thoroughly sensitised us about the programme,” he stated.

As the Anchor Borrowers’ Programme remains perturbed over payback defaults which had adversely affected the smooth operation and expansion of the scheme, agricultural experts have called for a better structured policy implementation that would ensure the programme achieves desired results.

The All Farmers Association of Nigeria suggested that practising farmers should be properly sensitised about the programmes and directly involved in the loan disbursement processes. The association also noted that before initiating the scheme to a group of farmers, the CBN needs to be aware of the production value and risks associated with the particular agricultural commodity.

Abiodun Olaniyi, executive director, Agriquest Africa, an agribusiness management organisation, said that many of the agricultural inputs provided to the farmers by the scheme are crude implements which may likely prove inefficient in the long run.

He explained that many of the farmers yielded little due to lack of mechanised tools to bolster production, which also resulted in little yields, making it more difficult for the farmers to meet up with loan demands.

Olaniyi suggested that the money used in purchasing some ‘out-of-date’ farm inputs can be better utilised in purchasing improved seedlings, mechanised tools and technology-based implements which will be presented to the farming associations and communities to foster improved productivity.

He added that asides providing these tools, their utilisation should also be properly monitored to ensure they are used for the right purposes.

Agriculture experts have also advised that the programme should be put under the direct supervision of the Federal Ministry of Agriculture and Rural Development (FMARD). This, they said, will help unburden the ‘loads of responsibility’ placed on the CBN which has been struggling to run the programme efficiently.