The CBN-supported food production initiative is primarily targeted at in- creasing local production of rice and wheat in the country. The endorsement of the programme by President Muhammadu Buhari underscores the fact that the diversification of the economy is now a reality.
It is no longer in doubt that over-dependence on crude oil revenue and imported food items pose great danger to the nation’s economy.
We support the ambitious new rice policy for small-scale farmers in the country. It is expected that the programme will be effectively implemented so that small farmers will be lifted out of their present poverty, into full commercial farming that will boost food production.
Available statistics indicate that Nigeria can no longer afford to spend huge foreign exchange on the importation of food items that can be produced locally in view of decreasing oil revenue. About N1 trillion is spent annually on food imports.
According to CBN figures, import of rice and wheat alone was N428 billion and N307 billion in 2013 and 2014 respectively. The CBN Governor, Godwin Emefiele, also said that food products like wheat, sugar, milk, rice and fish ac- count for N901 billion or 93.5 percent and N788 billion or 88.71 percent of the amount spent on imports in 2013 and 2014 as well.
It is good that the decreasing revenue from oil has re-awakened our consciousness to look inwards for alternative sources of revenue through agriculture.
Before the discovery of oil, agriculture was the mainstay of the economy. President Muhammadu Buhari harped much on the neglect of agriculture at the launching ceremony when he averred that “the discovery of oil was expected to complement our agriculture productivity, but we allowed oil to almost completely replace it”.
In spite of the neglect agriculture has suffered during the oil boom, it remains a key sector that can unlock the much- needed economic development Nigeria requires beyond oil.
The trend can be reversed if the new rice policy is allowed to achieve its ob- jectives by ensuring that the target ben- eficiaries have access to the fund. The N40bn support fund was taken from the N220bn Micro, Small and Medium Enter- prises Development Fund for farmers.
But there is the need to ease the method of accessing the fund and review its interest rates considering the recent complaints made by the Manufacturers Association of Nigeria (MAN) on the is- sue. We believe the banks will stick to the single-digit interest rate approved by the apex bank for the farmers.
Besides, we believe that a lower inter- est rate of between 3.5 and 5 percent maximum will be better. We say this because available data from the Bank of Industry (BoI) showed that only 6.7 percent of MSMEs had access to banks’ credit facility in 2014. There are about 17.3 million registered MSMEs in the country.
Access to funds and high interest rates charged by banks top the list of challenges facing MSMEs, including farmers. This has resulted in the mortality rate of about 80 percent recorded by small businesses within the first five years of start- up in the country, according to a survey by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
World Bank 2013 Report also showed that the number of commercial banks in Nigeria lending to MSMEs has decreased steadily from 48 percent in 1992 to 5 percent in 2012. This is a sad development that could hinder the progress of small-scale rice farmers in the country from meeting the needs enunciated in the ‘Anchor Borrowers’ scheme. All the same, the implementation of the programme could contribute significantly to the growth of the nation’s GDP and provide jobs for many Nigerians.
With the devaluation of the currency and the need for import substitution, commercial farmers have the potentials to reduce imports and save foreign ex- change. Beyond access to the N40bn, government should address other factors hampering the performance of farmers. These include lack of modern equipment, fertilizers and infrastructure that will reduce the cost of doing business.
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