Funding tomorrow’s agriculture today

Agriculture is a major sector of the Nigerian economy.

It is the country’s largest employer of labour, according to data from the World Bank Living Standards Measurement Study done in collaboration with the National Bureau of Statistics (NBS).

The sector employs approximately 60 percent of the populace at subsistence levels.

And Nigeria’s population is expected to grow to almost 402 million by 2050 , about double its present size, according to the United Nations Department of Economic and Social Affairs.

This rapid population growth will boost consumption necessitating a commensurate increase in agricultural output.

Concerned about a future Nigeria potentially marred by food insecurity, Sterling Bank once again rallied value chain players together via a webinar to review the sector to chart a path towards accelerated agricultural investments, adoption of technology and innovations to boost productivity.

The programme, themed: “Funding Tomorrow’s Agriculture Today”, attracted local and international industry experts in agribusiness financing and was hosted by Mr. Yemi Odubiyi, Executive Director, Corporate and Investment Banking of Sterling Bank Plc.

In his keynote address, Odubiyi said the ongoing COVID-19 crisis has made it clear that Nigeria can no longer depend on food importation to feed its people.

He noted that food security has become the core of the nation’s strategy well beyond the revenue generating potential.

He observed that the issue of food security should be a settled one given that the country has a comparative advantage in agriculture, adding that the sector also happens to be the largest employer of labour in the country.

Odubiyi remarked that about four years ago, Sterling Bank decided to commit 10 percent of its total loan book to agriculture because of its strategic importance as a sector with limitless growth potential and as a source of foreign exchange and employment.

He said under its HEART of Sterling strategy, the bank is becoming an increasingly specialised institution rather than a general operator as it is now focused on Health, Education, Agriculture, Renewable Energy and Transportation.

Bukola Awosanya, Group Head, Agric and Solid Minerals for Sterling Bank, said the bank provides finance for the entire value of the agribusiness adding that the bank also provides access to market and financial advisory services as well as structuring of businesses to ensure they are profitable.

Awosanya, who is also the chairperson of the Africa Rural and Agricultural Credit Association (AFRACA) -an advocacy group that promotes financing for the rural sector of the economy, noted that technology is critical to the growth of agriculture in the present day, adding the bank is already pursuing that agenda.

“At Sterling we design innovative, digital solutions to drive agricultural growth,” she said.

Also speaking, Adebisi Araba, Managing Director of Africa Green Revolution Forum (AGRF), one of the world’s largest platforms for transforming agriculture in Africa, noted that 2020 would go down in the history of mankind as being a reflection point for many reasons.

“We have witnessed a global pandemic that continues to test the resilience of our social and economic systems. We have also seen a rise in demand for narrowing the gap in social inequality and justice around the world.

“Indeed, 2020 is an avatar for the small still voice in our heads that you are ready for what comes next.”

Araba, who was a former Special Assistant and Technical Adviser on Environmental Policy to the Federal Ministry of Agriculture,  observed that in 2019, only four percent of aggregate bank lending in Nigeria went to the Agric sector, nil percent to the education sector, oil and gas got 27 percent while the Federal Government accounted for nine percent.

He said this is a challenge before the country and there was need to re-engineer the agriculture and food systems to ensure that the high viscosity of the flow of finance is reduced in a bid to unlock and deploy the boundless creativity in the private sector.

On his projection on where the agricultural sector would be by 2030, Araba expressed the hope that, “we will have more robust and integrated systems that will leverage digital technologies and more investments in infrastructure that will connect farms and funds, various stakeholders within the value chain in production and processing that will be better connected with fewer gaps in the market.”

“Hopefully, we will get to a position of less dependence on commodities from other countries that we have comparative advantage in.”

In his contribution, Stanley Munyao, CEO, Musoni Kenya Limited, said demand for agricultural products would continue to grow as population increases and there should be a need to be able to increase production to feed these increasing mouths across the world.

He added that the country should be able to inspire growth from small holder farmers by ensuring a greater percentage of the population are able to move from subsistence farming to large scale farming businesses.

He said the main trigger for this increased production would be access to finance and ability to leverage mobile phones  to reach rural farmers so that they would be able to get farm inputs and extension services.

He said there was need to provide farmers with digital access to funds as the brick and mortar method would no longer work.

Mezuo Nwuneli, Managing Partner, Sahel Capital Agribusiness Limited said there is need for enough capital to support small and big farmers. He said focus should be on companies with track records, adding that efforts should be made to ensure stable macro-economic factors that would attract foreign capital.

Caleb Usoh, Country Manager,  OCP Nigeria, said financial institutions need to find a way to reach small scale farmers that have no access to collateral by extending financing to them because they are key to increasing the overall food production on the African continent.

The session was moderated by Ayodeji Balogun, CEO of AFEX Commodities Exchange Limited, who observed among other things that it was really momentous for Sterling Bank to champion the need to talk about the future of Agric, remarking that hitherto, “We had always talked about the dream without how to finance it in a bid to realise that dream and this is the first time it is happening.”