He said bank lending to agriculture is very low in Africa because of poorly organised markets, the preponderance of rain fed agriculture to irrigation, high perceived risks by banks and poor infrastructure, limited agro-processing and value addition, despiteAfrican financial institutions having excess liquidity on their balance sheets.
He said in Nigeria, the situation is different because he has put in place innovative risk sharing instruments to reduce the risks financial institutions face in lending to agriculture, adding, “I led my team to work with the CBN to develop what is today, the largest ever risk sharing facility to leverage domestic financing to agricultural value chain in Africa called the Nigerian Risk Sharing facility for Agricultural lending (NAISEL).
“It is a $350 million risk sharing facility designed to leverage $3.5 billion of lending from commercial banks to the agricultural value chain. NAISEL was designed to also address structural issues within banks in particular, to ensure that they have internal capacity to properly assess the risk in lending, to make the banks raise their lending portfolios in agriculture and in particular, how much the bank portfolio was.
“When I took over in Nigeria as the minister for agriculture, the share of total lending going to agriculture in Nigeria was 0 %. Because of NAISEL and the fact that it combines risk sharing with fixing agricultural value chain, that share of total bank lending went to 5% by 2013. It has increased to 7.5% by this year and we expect it to hit 10% by 2015.
“Because of the success of our efforts, I want to share with you what has happened to agricultural input regime in Nigeria. When I took over as minister in 2011, zero percent of bank lending was going to agriculture input retailers, agro dealers zero percent. In 2012, the banks lent them $10 million. In 2013, the banks lent them $53 million. Bank lending to commercial fertiliser companies rose from $100 million in 2012 to $500 million in 2013,” he said.
Adesina blamed corruption for part of the problem of agricultural growth in the country saying: “In Nigeria, for 40 years government was buying and selling fertilizers. Where in the world is government doing business of buying and selling fertilizer? That belongs to the private sector.
“The role of government is simple; good services, good regulations and good incentives and so on. We ended the corruption of 40 years in the fertilizer sector in Nigeria. It took us exactly 90 days to end that corruption. What we did was take the government out of that business and launch a new way of reaching out to our farmers,” he said.
The minister said about 15 million farmers have been registered under the GES thereby providing them access to fertilizer, seeds and other necessary inputs, adding, “what has happened is that these farmers are able to increase their food security in rural farms households just because they get fertilizers and inputs.
“Nigeria that was known for its most corrupt fertilizer system today has been transformed. Today, $5 million of new investment in fertilizer manufacturing is ongoing in Nigeria. Today, Nigeria is feeding itself better.In the last three years, we have increased our additional paddy rice production in Nigeria by seven million metric tons,” he said.
But National President of the Apex Farmers Association in Nigeria, the All Farmers Association of Nigeria (AFAN), Architect Kabiru Ibrahim, said the sincerity of the present administration in developing agriculture as a business is doubtful as the government is yet to take the necessary steps.
He said if the federal government was sincere in helping the smallholder farmers to enhance their agricultural production, it should provide enough funds and strengthen the research institutes in the country to develop and make available to the farmers certified seeds that will increase the yields of the farms.
He said since the inception of this administration,government has never voted up to 2 percent of its total budget to agriculture, an act that explains the drop in the agriculture’s sectoral growth rate of GDP from 7.4% in 2006 to 2.61% in 2013.
“If he said NIRSAL (Nigerian Incentive Based Risk Sharing System for Agricultural Lending) used $5 million to leverage $5 billion loan for Nigerian farmers, one would like to ask which class of Nigerian farmers benefitted from that loan? The target is supposed to be the smallholder farmers. I am not aware of any smallholder farmer that benefitted from such loan. If they gave the loan to briefcase farmers, then that is not agric loan since it was not given to farmers.
“If government wants to encourage smallholder farmers to embark on agriculture as a business, then it should be seen to be grooming them to produce enough for their domestic consumption and even market some. That cannot be achieved through the allocation of two bags of fertilizer and that quantity of seeds they are giving them. We should tell ourselves the truth.
“While some African countries are harvesting upward of 10 tons of rice from a hectare, in Nigeria we are still battling to produce two tons from a hectare because of use of poor seeds mainly provided by government. Our research institutes have the capability to develop highbred seeds but they are grossly underfunded. This government is yet to adopt realistic ways of developing the smallholder farmers,” he said.
