Despite many financial windows, farmers struggle to access credit


One of the most difficult challenges facing Nigerian farmers is accessing finance to fund their operations, a situation that keeps many of them at a subsistence level.

The Central Bank of Nigeria (CBN), for example, has several funds set aside for farmers to access through commercial banks, but many of them complain that the conditions set by these commercial banks are so rigid that they can’t access it.

In 2009, the Central Bank of Nigeria (CBN) established the Commercial Agriculture Credit Scheme (CACS) to finance the country’s agricultural value chain (production, processing, storage and marketing). The program is a subcomponent of the Federal Government’s Commercial Agriculture Development Program (CADP) with a N200 billion bond raised by the Debt Management Office (DMO). Loans to eligible entities under the program are disbursed at a maximum interest rate of 9%.

Another N50 billion Agricultural Credit Support Scheme (ACSS) has been introduced to enable farmers to tap into the untapped potential of the Nigerian agricultural sector, reduce inflation and lower the cost of agricultural production.

Recently, to address the challenges of food security and youth unemployment across the country, CBN introduced the Accelerated Agriculture Development Program (AADS) to engage 370,000 youths in agricultural production, in collaboration with the state governments. According to the CBN, “The Private Sector-Led Accelerated Agricultural Development Program (P-AADS) has also been developed to complement the AADS by exploring partnership with the private sector to facilitate faster land clearing for production. of key agricultural products”.

Decades ago, the apex bank, in conjunction with the military government of General Olusegun Obasanjo, established the Agricultural Credit Guarantee Fund (ACGSF) by Decree 20 of 1977. The Federal Government owns 60% and the CBN 40% actions. . The base capital of the program was increased to N3 billion in March 2001.

By 2015, the CBN, through NIRSAL, under the Anchor Borrowers scheme, had invested over N600 billion in the sector, but many farmers were skeptical about who got the loan as ‘briefcase farmers’.

Securing finance from commercial banks apart from CBN funds was also not easy, as farmers said they were the hardest to deal with. And where there is a supply, the interest rate is ridiculous and can impoverish the farmer instead of raising him.

The insurance organizations and their policies have also not been in favor of the farmers, as some of them who took out a policy to cover the loan they got had a better experience.

Mr. Musa Labaran Wamba from Federation of Agricultural Commodity Associations of Nigeria said: “Truth be told, accessing funds from banks to Agriculture activities in this country remains a very serious problem because most banks will always tell you that they do not finance activities related to agriculture in their operational policies, and even those who will accept that they do will always place very hardship and conditions, such as you must open and maintain an account with the bank for a period of at least six months to enable them to assess your suitability for the said facility; and in this process, the farmer is hardly eligible for the facility due to unjustifiable reasons.

You will agree with me that if a farmer had enough money to run an account to the satisfaction of the bank before he qualified for the facility, why not use the same money to fund his farming project directly?

“In some cases still, the interest rate of the banks is sufficient to impoverish the poor peasant more than he came to the bank. In case the bank decides to grant such a facility, the timing of disbursement is another issue as such facilities can be disbursed when the cultivation period of that particular commodity could have been completed. Another problem is the syndrome of asking for a bribe by bank staff themselves. No facility is ever granted without a bribe by bank staff.

Mr. Dele Olorunfemi said most farmers were unable to access the funds due to the bureaucratic procedures involved. Many CBN approved training centers only collect money from farmers for training and preparing a feasibility study, which in the end might not result in the release of money by NIRSAL Micro finance.

“You have to have someone’s influence or introduction to get it through. Commercial banks also don’t help matters except you are known or ready with collateral to get theirs at their high interest rate.

“The approved training institution that trained me after payment gave me the training certificate and the loan form to fill in, which was submitted to NIRSAL Microfinance controlled by the CBN. I had a talk with the microfinance bank since last year but no news from them so far. Imagine what farmers must go through if I am from the Federal Ministry of Agriculture and Rural Development (FMARD) experiences it. I had to pay N10,000 for the feasibility study and N5,000 to N10,000 for the training. All of these have almost gone into voicemail now,” he said.

In Benue State, our correspondent spoke to a number of farmers like Vitalis Tarnongu, who exposed several reasons responsible for farmers’ endless battle to access credit despite numerous financial windows.

Tarnongu said Nigeria was made up of mostly smallholder farmers who for the most part are unaware of the existence of these credit facilities, while portfolio farmers have generally hijacked these opportunities thereby depriving the real farmers.

He added that the checklist for accessing credit facilities was generally not user-friendly for small-scale farmers, pointing out that where a farmer would be required to provide collateral in the form of land ownership with a certificate of occupation in a capital to access 1 million naira, it is very daunting.

He further noted that commercial banks which are usually the assignees of credit facilities were not prepared to deal with smallholder farmers for fear of risk.

Similarly, another farmer, Charles Iordye, who is the president of the Sesame Farmers Association in the state, said accessing credit facilities has been a daunting task for them.

He said, “We find it very difficult and in the end we don’t have it at all because the conditions given to the farmers by the financial institutions are too difficult for them to meet.

“Sometimes the conditions are met, but the financial institutions arrive late to the farmers, which makes the program useless. The insecurity in our regions also prevents financial institutions from accessing our farms for aggregation.

In Plateau State, farmers have different stories when it comes to accessing credit to boost their businesses.

For Dayyib Zachariah Adam, who is the president of the farmers’ association in the Gengere neighborhood of Jos, the state capital, said that since 1991 (more than 30 years now) when he started farming, he had never obtained credit to support its activities.

Adam said he was even asked to mobilize his members in this regard, which he did, but till date he never heard from them again.

On his part, however, the secretary of the Barkin Ladi Local Government Area Tomato Growers Association, Auwal Tanko Haruna, said that they had access to credit at the local government level from time to time and at other times at the state level.

He explained that they often get the credit at a single-digit interest rate, adding that even GIZ (a German company) also facilitates the credit assessment for them.

In Kano, 48-year-old Malam Ubale Bunkure revealed that he produced more than 80 bags of millet a year during his 17 years as a farmer, but never had access government or agency funding. He added that even the very popular anchor borrower intervention did not include millet farmers.

Similarly, a Kano-based wheat farmer, Alhaji Jibrin Buba Bello, said that for more than three years, the small improved seed intervention going through the Lake Chad Institute stopped coming. He claimed that as a farmer who believes in growing wheat, he had practiced for 10 years with resources he had personally obtained, adding that even banks were unwilling to help an average farmer.

A poultry farmer, Malam Rabi’u Ibrahim Kumbotso, also said poultry farmers have been left at the mercy of nature and personal funding. Important as poultry farmers are, he says, no government intervention has a flair for them. He added that even at the time of the ordeal of the poultry farmers, like the bird flu epidemic, they were left alone to face their problems.

By Vincent A. Yusuf, Abuja, Hope Abah Emmanuel, Makurdi, Dickson S. Adama, Jos & Ibrahim Musa Giginyu, Kano


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