NIGERIAN FARMERS: CBN POLICY AND NIGERIAN COMMERCIAL BANK

 

Various governments have introduced different agricultural investment policies in Nigeria,  But the Buhari’s administration has championed it through the CBN governor, Mr. Godwin Emefiele, enacting various agricultural investment policies aimed at food security in Nigeria. Although, the expectation from commercial banks is to act as an intermediary between the Apex bank (CBN) and the farmers, the commercial banks have been acting as a gridlock blocking the farmers from accessing the supposed CBN intervention fund which is extremely worrisome to the Nigeria government’s Agric economic policy and the major problem starts from the Nigerian commercial Banks.

In Agribusiness, the importance of time cannot be over-emphasized as there’s a time to plant, a time to breed a day old chick, time to harvest, time to lay eggs, time to hatch chicks, time to milk, and so on. Furthermore, the facility expected to stockpile grain and warehousing is targeted towards the harvest period. Most of the time, when a facility account officer of a commercial Bank is called upon in request of an update on an existing facility, the response is always that they (account officers) are still expecting the credit committee to discuss or that the credit committee sat but did not discuss Agric Facility and all sort. This could go on for about 6 to 12 months. While the farmer continues to operate the farm account, the commercial bank continues profiting from the farmers’ banking transactions in anticipation that the farmer will be availed a single digit interest rate facility, thereby depleting the farmer’s cash flow and income due to lengthy period of waiting on the bank.

Before this pandemic numerous farmers had submitted their facility application to various commercial banks to enable them access Agric loan, but due to delay in the approval process of commercial Banks, most farmers could not assess the funds before the pandemic, subsequently farmers began to loose income. The price of raw materials then start to soar. Farmers kept hope, expecting banks to inflow the expected facility unfortunately, commercial banks stopped communicating with the farmers on their expected facility. Currently, (in this period of COVID – 19 pandemic)banks are more interested in their  own revenue generation from account maintenance charges, stamp duty fee etc. Considering this situation, how will farmers have access to the facility from CBN? What becomes the fate of the farmers that have embarked on projects expecting commercial banks to approve or inflow the expected facility?  This could be quite frustrating!

In reviewing and structuring the Agric facility, the commercial banks should consider some key factors.

They must understand the business before structuring the loan. They must also understand that time is of the essence as most times, farmers deal directly or indirectly with either Livestock or plants. The commercial bank agric desk & the credit unit lack synergy during the approval processes of the Agric facility, hence they should decentralize the credit committee. Agric credit should be handled by Agric credit unit that understands agricultural investment and business.

SUGGESTED SOLUTIONS: To enable the laudable policy of CBN trickle down to the farmer in time to help achieve the CBN governor’s policy, the following recommendations are made.

  1. Establish an agribusiness credit committee that understands agricultural investment in various commercial banks.
  2. CBN should organize routine training for the agric desk and agribusiness credit committee.
  3. The agricultural business credit committee should be separated from the general credit committee.
  4. The Apex bank CBN should give an estimated target of agribusiness that should be generated for the Agric scheme to various commercial banks periodically or Annually.
  5. The Apex bank CBN should have farmers stakeholders meeting within various agribusiness, owners crop, Livestock, and processing   This will enable CBN to get to the grassroots its agribusiness policy.
  6. The CBN should devise a seamless means of correspondence like sending Newsletters periodically to farmers in their Database for updates and in turn, get direct feedback from the farmers.

Furthermore, enforcing border closure to drive growth and sales volume of various farm products, cannot be over-emphasized.   Almost all farmers have seen the benefits of the border closure policy. it is important to note that smuggling destroys the nation’s agricultural investment and various manufacturing sectors reducing national revenue hence the smuggled products don’t pay any tax to the Nigerian government nor custom duty payment. For instance, if smuggled products pay custom duty, the price of the smuggled goods becomes more expensive than the same product produced or farmed in Nigeria while products from Nigeria exported to various countries pay those countries custom duty.

It is important to note that the border closure has strengthened the poultry industries (dressed chicken), palm oil products, Rice, etc.  This has prompted business expansions in various sectors, in turn, creating more employment for the Nigerian youths.

Written by: Nwapali Onyeagu

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