The Central Bank of Nigeria documented an N378.5bn gap in loan repayment by Anchor Borrowers program participants during six years, according to data gathered from the apex bank’s findings.
Between November 2015, when the ABP scheme started, and November 2020, the CBN completed 2.3 million projects and disbursed N497.2 billion to farmers through the program.
However, according to data from the CBN’s Fourth Quarter 2020 Economic report, just N118.7 billion was reimbursed by beneficiaries during the review period.
On November 17, 2015, the President, Major General Muhammadu Buhari (retd. ), announced the ABP to reverse Nigeria’s negative food balance of payments.
Farmers that grow grains (rice, maize, wheat, etc.), cotton, roots and tubers, sugarcane, tree crops, legumes, tomato, and animals will benefit from this initiative.
Loans are made available to beneficiaries through Deposit Money Banks, Development Finance Institutions, and Microfinance Banks, all of which are recognized as Participating Financial Institutions by the program.
According to the CBN, the program’s overarching goal is to establish economic ties between small holders and reputable large-scale processors to increase agricultural output and significantly improve agricultural firm capacity utilization.
A brief examination of the agricultural sector reveals that the scheme may have had a positive influence, as the sector’s aggregate output remained on an upward trajectory during the period under consideration.
An examination of Gross Domestic Product Reports from 2015 to 2020 found that total agricultural output increased by 91.2 per cent from N19.5 trillion to N37.3 trillion.
Between 2015 and 2016, aggregate output in the industry increased from N19.5tn to N21.4tn, then to N23.9tn in 2017, then to N27.4tn in 2018, and N31.8tn in 2019.
It was discovered that, during the evaluation period, sub-activities of the agricultural sector, on which the ABP program concentrates, such as crop production and livestock, had a rise in economic performance.
For example, agricultural production increased by around N12.1 trillion between 2017 and 2020, from N21.1 trillion in 2017 to N33.2 trillion in 2020, while livestock output increased by N2 billion, from N1.9 trillion to N2.1 trillion.
Similarly, the agriculture sector grew from 14.03 per cent to 15.14 per cent in the first quarter of 2021, with crop production being just the main driver of the sector.
According to the National Bureau of Statistics, “the (agriculture) sector grew by 15.14 per cent year on year in nominal terms in Q1 2021, a decrease of 7.33 percentage points from the corresponding quarter in 2020 but an increase of 1.11 percentage points when compared to the previous quarter’s growth rate of 14.03 per cent”.
“Crop production remained the major driver of the sector, as it accounts for 71.69 per cent of overall nominal growth of the sector in first quarter 2021.
“Agriculture contributed 21.42 per cent to nominal GDP in the first quarter of 2021. This figure was higher than the rates recorded for the first quarter of 2020 but lower than the fourth quarter of 2020 which recorded 20.88 per cent and 24.23 per cent respectively”.
While experts who examined the program and its effects praised the CBN for initiating the ABP, they cited insecurity as a major factor impeding the scheme’s effectiveness.
Gbolade Idakolo, Chief Executive Officer of SD&D Capital Investment and an economist, stated, “The ABP initiative is a good program.” However, the result has been tainted by the problem of insecurity caused by the farmers-herders crisis.
“Most of the farmlands have been overrun by herders, which has made the farmers unable to repay the loans acquired.
“So, that is why you see that according to the consumer price index just released, food inflation continues to rise because the farmers are not producing optimally and even those that are producing, because of insecurity they are not able to transport their products to the markets where they can be sold. This brings about scarcity which makes the cost of food increase.”
He went on to say that the scheme’s efficiency was also hampered by sectionalism and unequal load distribution across the country’s regions.
Johnson Chukwu, Managing Director of Cowry Asset Management Limited, agreed with Idakolo, noting that without proper security for farmers, CBN finance through the ABP program would not deliver substantial benefits in the agriculture sector.