Despite the decline in the nation’s GDP, the agric sector recorded positive growth above 4% in 2016. What are the factors behind this growth?
Despite the challenges in the macro environment, businesses are increasing investments in mechanized farming and other activities in the agric value chain, such as processing, storage, packaging, delivery and logistics. As a result, there has also been a surge in investment interest by both foreign investors and investment fund managers. The renewed focus of the Nigerian Government on reviving productivity in the sector also contributed to this growth. The new Agricultural Promotion Policy (APP), Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) and other Agric-financing arrangement, have given farmers and businesses new impetus and opportunities for growth.
Many private organisations have also diversified into the export market to earn foreign exchange following the prevailing scarcity of forex. Export of agro commodities is a low hanging fruit for prospective exporters and due to the opportunities presented by the devaluation of local currency, the sector witnessed new entrants which also accounted for part of the growth. What is your projection for the agric sector in 2017 and how can we improve upon this performance in 2017? Performance improvement recommendations include: The need to deepen Government intervention policies as well as increase public and private partnerships for investments in the sector to end food importation and encourage exportation; The ease of access to loans for farmers: Medium-scale businesses Our small- and medium-scale businesses continue to face difficulties in accessing long term and more affordable credit. Most stakeholders are of the opinion that the criteria set to access the Government intervention funds (loans either by the CBN or direct from the Federal Government) are seemingly unrealistic. The conditions are said to be too stringent for the consciously marginalized low-scale farmers, who constitute over 80 percent of the country’s farming population. Despite the challenges of the agric sector, some banks are still making efforts to provide financing support to farmers, what is Union Bank’s experience in this regard? The key to unlocking the growth potential of agriculture in Nigeria is to empower the millions of smallholder farmers who have access to millions of hectares of land. This will ensure they have access to appropriate inputs, sufficient financing that will significantly boost productivity. The key model developed to this effect is the Agricultural Franchise Model. This makes the small holder farmer a franchisee of a larger farm, with access to all the necessary inputs. This model stands to minimize the risks associated with investing in the sector and thereby stimulates the financial sector to invest in the Nigerian Agricultural Sector. With no evidence of improved Forex liquidity, and the Forex shortage still one of the key constraints on activities in Nigeria, we now expect negative growth to persist. Union Bank is unrelenting in the provision of funding support and technical advisory services to MSMEs and Commercial agribusiness projects. Our active engagement in agro-commodities value chain financing is hinged on the fact that the benefits of agriculture is becoming more visible, and the sector has huge potentials to become a major foreign exchange earner and help boost the nation’s revenue base. Our development partners – CBN, NIRSAL, NAIC have been supportive over the years as regards providing the enabling on-lending support for qualitative boost in Union Bank’s agribusiness risk assets portfolio. Our team possesses the requisite skills set to actively function in the specialized sector – in areas such as relevant trainings in agro-commodities value chain financing, technical appraisal of credit requests, project monitoring and evaluation, enabling us make risk-conscious and purposeful decisions.
13 February, 2017