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From Oil to Agriculture: Rice fuels new confidence as FG’s Anchor Borrowers Programme kicks-in

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By Charles Ike-Okoh

WED 03 MARCH, 2021-theGBJournal- ‘’The investment in the Anchor Borrowers’ Programme (ABP) are already paying off with the attendant multiplier effects on the economy and Nigeria’s food security,’’ declared Senator Abubakar Atiku Bagudu, the Kebbi State Governor, Tuesday at the commemoration of the Rice Anchor Borrowers’ Programme, National Rice Festival and the flag off of the 2020/2021 Dry Season Rice Cultivation.

‘’Our hard working populace has been supported by good economic policies of President Muhammadu Buhari, economic institutions like the Central Bank of Nigeria, agencies and other commercial banks,’’ he added.

The most concrete sign of the support is in the row of rice pyramids displayed in Kebbi as Nigeria celebrates five years of the ABP. But the pyramids are also emerging in some cities across the Northern part of the country such as Kano, with one of the highest number of rice milling plants.

Conventional bank credits to rice millers have also soared since the programme began with 23 participating financial institutions funding agric growth. The vast pools of liquidity are allowing investment to be made within the agric sector, fuelling explosive growth in the number of farmers cultivating the country’s arable land.

This is a sector that has come of age in its requirement for global investments-capable of attracting companies and institutions that have substantial financial and strategic aspirations for investment opportunities.

The agric sector remains the biggest hope for growth given its 82 million ha of arable land and Rice has emerged as the future, set to eclipse the famous groundnut of pyramids.

The country is already the biggest producer of paddy rice in the continent, averaging 8 million metric tonnes. It is ranked the 14th largest rice producer in the world. Rice tops the list of income generators for Nigerian farmers and Nigeria still has enormous potential to raise productivity.

The investment in the Anchor Borrowers’ Programme is in recognition of the high growth and export potential of the agriculture sector and rice in particular, after decades of paying lip service to the talk of diversifying the economy.

It also underlines the Federal Government’s willing investment in the agriculture sector having recognised it as a strong support mechanism for macroeconomic and non oil sector growth.

And recent mid-term growth strategies have sought to significantly place emphasis on financing or augmenting rice and agric production and exports in collaboration with investors from the private sector-a strong show of support for a sector that fell out of favour since the discovery of oil in the 1950s.

The agric sector overall, remains the largest single contributor to real GDP growth, and a major source of employment in the country. In recent times, agriculture contribution to real GDP has risen steadily, from 24.4% (WB) in 2016 to 26.9% (Q42020-NBS). This is despite the persistent security challenges across the country. Crop Production in Q4 2020 (90.51% of Agriculture GDP-NBS) increased by 3.68% y/y, lubricating the sector’s wheels, and led to the overall growth of 3.42% y/y (Q3-20: 1.39% y/y).

The various forms of government-led interventions including tax exemptions for rice plants, guaranteed minimum price, and supply of inputs appears to bear some fruits also. For instance, the Federal Government increased the Agricultural Credit Guarantee Scheme (ACGSF) share capital, from NGN3.00 billion to NGN50.00 billion, to increase access to agricultural loans.

The Rice Anchor Borrowers’ Programme, given birth to by the Central Bank of Nigeria (CBN) on November 17, 2015 is the first serious sign that Nigeria is ready to begin the diversification of its economy and to focus on agriculture as a major source of revenue, besides oil.

According to the CBN, the programme was designed to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities. The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food. At harvest, the SHF supplies his/her produce to the Agro-processor (Anchor) who pays the cash equivalent to the farmer’s account.

The Programme evolved from the consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, State Governors, millers of agricultural produce, and smallholder farmers to boost agricultural production and non-oil exports in the face of unpredictable crude oil prices and its resultant effect on the revenue profile of Nigeria.

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