Home ViewpointColumns Open letter to CBN Governor, Minister of Agriculture

Open letter to CBN Governor, Minister of Agriculture

Forex scarcity restricts access to N100bn pharmaceutical fund -

By Dele Sobowale

Dr, you once said to me that I have people like you to campaign for me and to canvass my ideas. I sincerely thank you and wish to take further advantage of it.

The CBN has put in place a number of Agric Intervention Funds. Very commendable. Because of COVID-19 they reduced the interest rate to 4% but with expiry date of March 2021.

But because they put the entire risk on the commercial banks through which the money is disbursed, the  banks  in turn demand  heavy collateral which very few can afford. So, very few farmers have benefited. Solution: the CBN should share in the risk.

Second, the expiry period for the 4% interest should be extended by at least six months to September 2021.”

Large scale Professional Nigerian farmer.

Nigeria media sometimes misses the opportunity to intervene on urgent matters which are in the national interest even though those issues fail to make front page news. But, the problems now besetting the nation’s agricultural sector make it imperative for some of us to detach ourselves from the “breaking news” — #ENDSARS, insecurity nationwide and ASUU/FG negotiations. In fact most of us seem to forget that all those problems can only get solved after we have taken care of food first. Right now, the entire nation is faced with imminent famine, not only in the short term, but for years to come unless the Central Bank and the Federal Government revisit the issue of Agricultural Intervention Funds.

For years, I have asked the sender of this message, one of the biggest farmers in Nigeria, to allow the media to intervene in disputes such as these which are in the national interest in a bid to help improve on policy and service delivery and ultimately to improve on food security for Nigerians. But, like a lot of Nigerian farmers known to me over several years, he had always been self-reliant. Consequently, he had financed virtually all of his farming business – including exports – from his own resources. He had made very little reliance on bank support.

Now, like the rest of us, his farming business is coming under the strains placed on all farmers by floods, by a global economy in recession and most importantly by COVID-19. He is not alone – as I quickly discovered. Immediately after receiving his surprise text message, quoted above, I put a call through to seven large scale farmers known to me in three zones of Nigeria – North Central, North West and the South West. His own operations are based in the South South.

Each of them had invested hundreds of millions of naira in different farm products. To each of them I had read the text message and asked for their reactions. Not only was there unanimity of agreement, it became clear to me that I had stumbled on a secret which had eluded all of us in our collective drive for food security.

The CBN had taken the highly commendable step of reducing interest rates on agriculture to 4% — undoubtedly in order to bring it below any conceivable inflation rate. That was revolutionary. Unfortunately, the CBN measure was a necessary but not a sufficient condition for channelling the hundreds of billions made available to farmers to them. Meanwhile, the banks, through which the loans were processed, made no corresponding concessions to borrowers.

Invariably, the same conditions were imposed with respect to collaterals. Consequently, the CBN had made the intervention funds available only on paper. In practical terms, Nigerian farmers are not better off today than before the CBN intervention funds were provided. One of those spoken to likened the situation to “somebody providing you with food while at the same time tying your hands and padlocking your mouth.” That was a very apt analogy which carries within it some of the solutions to the problems.

“To sleep over problems before they become a crisis is far better than lying awake about them afterwards.”



From all available evidence, Nigerian agriculture is in dire trouble. Some of the repercussions are already known to those who want to know the truth. Millions of small scale and subsistent farmers in all the zones of Nigeria have abandoned their farms on account of banditry, herdsmen, and kidnappers. Even harvests are being abandoned since the food will most likely be seized by bandits in core Northern states. The aggregate harvest this year and early next year will most probably be the lowest in years. It is most unlikely that those driven from their farms this year will soon return.

Increasingly, Nigerians will have to depend on those still courageous enough to continue to farm. That reliance on a diminishing number of farmers cannot yield results unless the Federal and State governments are prepared to assume more risks than they now do.

Obviously, the banks will continue to resist any attempt to undertake such risks. At the same time, farmers without additional collaterals cannot access funds made available to them. Nigeria will be the loser in the end.



We are now in what has become a Mexican stand-off – CBN provides funds; banks sit on funds; farmers cannot access funds; aggregate agricultural output is depressed and Nigeria faces imminent famine. Clearly, any solution we device must aim to get the funds to farmers. Without that, the CBN has worked in vain. The nation will face a serious food crisis and the consequences of that.

Let us start with the easiest concession which can be granted. The CBN should not only extend the expiry date beyond March 2021, it should make the facilities available throughout next year. That measure will allow all the stakeholders to work out the issues of risk and collaterals.

On risk, I am not on sure footing here. But, we might need to create an agency which will bear some of the risks instead of expecting banks to alter their behaviour without any incentive to do so. One problem banks have accepting farms as collateral, even before banditry etc had been getting rid of the assets after taking over. That one remains a stumbling block. But, we must find a way around it. Otherwise, we are in deep trouble.

Vanguard News Nigeria

Source link

related posts

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More