Nigeria is at the threshold of the much-needed agricultural revolution, as food production remains a significant challenge all over the world, MOTOLANI OSENI, looks into challenges facing diversification of Nigeria’s economy, need for effective agricultural financing, the Central Bank of Nigeria (CBN) intermediation role, and contributions from agricultural friendly banks in bridging the funding gaps…Excerpt
Development of Agriculture continues to remain a critical issue for Nigeria’s economic growth, poverty reduction and ensuring food security of the country, as over 70 per cent of the rural households depends on agriculture as their principal means of livelihood.
The recent volatility of food prices enduringly affected Nigerian food system. The imposing of import restrictions by the government while prices of food were high and resulting distrust in the functioning of the price of crude oil at the international markets forced countries that depend on agricultural imports to change their strategies to meet domestic demand.
Given this development, many Nigeria financial institutions started investing in agriculture. Several of these large scale investments triggered high rates of agricultural growth in recent times.
In Nigeria, with access to finance still a significant challenge, agriculture remains underdeveloped with the majority of farmers in the rural areas still practicing subsistence farming.
CBN intermediation roles
As part of efforts to increase funding for the agricultural sector, the Central Bank of Nigeria (CBN), in line with its developmental functions and in collaboration with the Federal Government and Nigerian banks established various agricultural schemes as a way of bridging the funding gap.
Such interventions include the Commercial Agriculture Credit Scheme (CACS), Commercial Agriculture Development Programme (CADP), and the Interest Draw-back scheme, Agricultural Credit Support Scheme as well as the recently introduced Anchor Borrowers’ Programme (ABP).
The broad objectives of most of the schemes are to fast track development of the agricultural sector by providing credit facilities to commercial agricultural enterprises at a single digit interest rate;
enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation; generate employment and diversify revenue base.
Heritage Bank as an agricultural friendly lender
In complimenting the efforts of the Central Bank, Heritage Bank Plc has made a massive success of the schemes by making funds available to both individuals and corporate organisations in their efforts to increase agricultural output.
The bank under the headship of Mr. Ifie Sekibo, an urbane seasoned banker who is the Managing Director and Chief Executive Officer has distinguished itself in financing critical agricultural projects in the country and, in the process, putting smiles on the faces of many farmers.
Since the five eventful years, the bank has opened its doors to its teeming customers, the showpiece of its operations is a full gamut of completed, on-going and nascent people-oriented programmes- create, preserve and transfer wealth across generations in the country.
This line of operation is steadily yielding great results as the nation continues to move its economic base towards the direction of the future, with a robust emphasis on thoughts about diversification of the county’s economic base.
Within its period of operation, Heritage Bank is being positioned into a bigger and stronger financial institution that is placed to play a significant role in the much-envisaged transformation of the nation’s financial sector in line with the country’s stature as one of Africa’s largest economy.
Agricultural intervention initiatives
With the increasing recognition of agriculture as the ‘beautiful bride’ of Nigeria’s economy, Heritage Bank has continued to make relentless efforts in agricultural financing which are fast gaining new interests and more attention within the business circles.
As agriculture continues to be business, financing provides tremendous opportunities for lenders and borrowers, either at small or large scale.
Heritage Bank has not only encouraged both governments, corporate and individual (including young people to embrace optimal productivity and greatness in this sector), it has taken the front seat in the drive to support them in the attainment of noble agricultural virtues by funding various agricultural projects in several states in the country, especially in Oyo, Kaduna and Zamfara states.
This line of action has readily compelled young and vibrant minds into getting involved in providing affordable financial solutions that can help agribusiness investors in various aspects of agriculture.
Presently, the bank is practically involved in preparing a good future for the youth, which is imperative, while recognizing the need to expand the horizon of young people, broaden their options and increase their choices.
The institution realized that the youth are needed as solution providers, incubators of ideas, promoters of innovations and implementers of positive change through agriculture and entrepreneurship.
However, five years of the bank’s existence have promoted renewed belief and a sense of pride in the identity of Nigeria, as a people and a country.
Innate virtues of industriousness, illustriousness, and entrepreneurship have been reawakened, as the youth and people have risen massively to embrace legitimate hard work in the agricultural sector as against indolence, dependence on government and servitude.
Commitment to Agricultural value chain
Commenting on the lender’s commitment to the Agricultural value chain, the Managing Director /Chief Executive Officer of the bank, Sekibo has been on the driving seat of the agricultural financing revolution going on at present in Heritage Bank.
He has vowed that the bank would not relent in its efforts at boosting the agriculture base of the nation, affirming that Heritage Bank would continue to make farming profitable to stakeholders and attractive to the youth.
The bank, he said, would remain focused in supporting agribusiness through financing the purchase of modern technology, as it would bring about transformative development to the economy in general.
He, however, noted that the bank would support the drive for cash crop commodities that would boost Nigeria’s foreign exchange earnings, which the President Mohammad Buhari’s administration has always been cautious given the dangers the continuous reliance on imported food items pose to its efforts to create jobs as well as develop and diversify the economy.
Collaboration with CBN to provide loan for agricultural projects
In a bid to further support the real sector and unlock food potentials, Heritage Bank Plc in collaboration with CBN provided N2billion long term facility under the Commercial Agriculture Credit Scheme (CACS) to Triton Aqua Africa Ltd (TAAL).
TAAL known as Triton Farm accessed the CACS through Heritage Bank, which was used to set up aquaculture businesses; nursery/hatchery to produce fingerlings and brood stock in Ikeja and earthen ponds for catfish and Tilapia in Asejire, Iwo and Gambari towns in Oyo State.
Under the arrangement, TAAL will also help small-scale farms increase their fish production by making fingerlings available to them.
In the short term, the loan is expected to help Triton double its current production capacity of 25,000 metric tonnes with a projection to scale it up to 100,000 metric tonnes in five years.
The bank also has thrown its weight behind Globus Resources Limited, a subsidiary of Triton Group, to flag off the second phase of afforestation programme in Oyo state.
Nigeria’s current demand capacity for fish is estimated at 2.7million metric tons and the country currently produces 800,000 metric tons.
Triton is now producing 25,000 metric tons and with them on board, about 25,000 metric tons capacity will be added to our current production, the company’s projection is to reach 100,000 metric tons in 5years.
Heritage Bank partnership with State governments
Heritage Bank is in partnership with the Oyo State government in a multi-billion-naira project to give agriculture a boost in the state.
Under the initiative, the bank is supporting the Oyo State Agricultural Initiative, OYSAI, a programme designed to revive agriculture, boost agro-allied businesses and massive empowerment programme for both youth and women across the state through the creation of thousands of jobs in the sector.
This huge, albeit laudable, project that is spread across 3,000 hectares of land in 28 of the 33 Local Government Areas of Oyo State, is in three stages: food crop cultivation, cash crop/horticulture, and food processing.
Heritage Bank is supporting agro investors involved in this initiative with funds and advisory services and indications are that the programme has already led to more than 30 per cent increase in food production in the state.
Support of small holders’ farmers to boost rice/soyabeans production
Heritage Bank has also supported thousands of small holder farms in Kaduna and Zamfara states to benefit from the bank’s financial support for rice and soya beans production under the Central Bank of Nigeria’s Anchor Borrowers Programme (ABP).
Sekibo says the bank’s drive to support rice production is borne out of the conviction that agribusiness is profitable and the act of patriotism to achieve food security and sufficiency in the country.
He hints that Heritage Bank is effectively tackling the bottlenecks since it has long identified the opportunities in agribusiness before the collapse of crude oil prices through its various programmes,
which will contribute to the projection for the year 2020 in the production of 7.7million metric tons of milled rice or 10.8million metric tons of paddy rice at milling recovery ratio of 62 percent.
On Heritage Bank’s involvement in ABP, the Bank provides on-lending funding to aggregated farmers to grow various products that will serve as raw materials to the processors, thereby ensuring market linkages and access to the market as well as reduce importation and conserve Nigeria’s external reserves.
In 2016, the sums of N54,892,728.00 and N248,413,350.00 were sourced from CBN and disbursed as loans to 185 rice farmers and 414 soya bean farmers respectively in Kaduna State.
In 2016, N37, 995,300.00 was disbursed to 259 rice farmers via 11 cooperatives in Zamfara State. The Bank executed MOU for partnership with NIRSAL in 2017 with the following transactions already consummated.
Poultry farming in Oyo State – N29million received from NIRSAL and disbursed to farmers Maize cultivation in Ogun State – N157million received from NIRSAL and disbursed to farmers Cassava cultivation in Kebbi State – Transaction size is about N500million approved by CBN.
Heritage Bank Plc signed N232 million pilot phase of the out-growers agreement with Biase Plantations Limited (BPL), and its joint venture partner, PZ Wilmar Limited to produce best-in-class palm oil, using the ABP model.
The first tranche of N113million has been received and disbursed accordingly. The pilot scheme covers 45 farmers, grouped into four co-operative societies with a land mass of 150 hectares, and the funds to be administered is from BPL.
Bank as a pilot partner for execution of N3 billion YIEDP
Youths are also encouraged through the bank’s partnership with CBN under the Youth Innovative Entrepreneurship Development Programme (YIEDP) to start young and create wealth, adding that from available statistics, 80 percent of applicants under the youth empowerment programme choose agriculture as the preferred sector.
It is in recognition of the bank’s track record in this regard that influenced its selection by the CBN as its pilot partner for the execution of the N3billion YIEDP.
The programme is aimed at creating sustainable wealth and employment in the country with a focus on dependable job-creating sectors such as agricultural value chain (fish farming, poultry, snail farming), cottage industry, mining, and solid minerals, creative industry (tourism, arts, and crafts), and Information and ICT.
For its enormous supports to this sector, Heritage Bank Plc, Nigeria’s Most Innovative Banking Service Provider in 2017 was bestowed with the inaugural Nigeria Sustainable Banking Award convened by the CBN “For Sustainable Transaction of The Year in Agriculture.”
Again, the Nigeria Agriculture Awards (NAA), at its annual event convened by AgroNigeria (The Voice of Nigeria’s Agriculture), to appreciate immense efforts of those who have contributed to the success of the agriculture sector in the country, announced Heritage Bank as the Agric. Bank of the Year.
According to NAA, Heritage Bank was selected in recognition of its footprints in the Agric. space, especially the Triton Aquaculture Project.
No doubt about the fact that these feats will empower the people in addition to boosting Nigeria’s economic revival and leading the country’s foray into modern and sustained industrialization.
The many innovative supports by Heritage Bank across the country for the growth of the productive sector in the agriculture, SME, entertainment and numerous spheres, point to Nigeria’s hitherto untapped rich human potentials.
Meanwhile, Heritage Bank is not only actualizing its vision of partnering with individuals, organisations, and governments to create, preserve and transfer wealth across generations but is also playing a crucial role in helping to achieve the government’s ambition of diversifying the economy.