Anchor Borrowers and CBN’s wasteful interventions

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IT is alarming that some beneficiary farmers of the Central Bank of Nigeria’s Anchor Borrowers’ Programme owed the bank N463 billion as of March 2021, according to data from the CBN Economic Report for April. The ABP was officially expanded on November 17, 2015, by the President, Major-General Muhammadu Buhari (retd.), to boost agriculture, engender food security, stabilise the economy, create employment and reduce reliance on crude oil.

The programme, which kicked off with a pilot project in Kebbi State, based on its dry season rice production advantage, has been robustly linked to the increase in rice production in some states, though the country’s rice productivity is still low. Some of the loan beneficiaries include farmers cultivating cereals (rice, maize, wheat, etc.), cotton, roots and tubers, sugarcane, tree crops, legumes, tomato, and livestock. Agricultural extension workers are not left out of the scheme.

But six years later, some farmers and extension workers in some states appear to see the programme as a cash cow. There are too many defaulters whose actions are threatening the sustenance of the programme. Many of the beneficiaries appear to interpret the money to be their share of the national cake.

The National Vice-President, Maize Farmers Association of Nigeria, Muazu Iliyasu, harped on this when he addressed the association’s 12,562 members in Adamawa State at the launch of the 2021 wet season harvest. He said, “Most farmers think this (Anchor Borrowers Programme) is a bonus as part of the national cake. But we are disputing that fact, emphasising that it is a loan which must be repaid. We are doing our best and now they are well sensitised. They now know this is a loan and not a grant per se. We have gone round and received support from traditional rulers and village heads at the grass-roots to encourage repayment and recovery.”

Currently, loans are disbursed to the beneficiaries through deposit money banks, development finance institutions and microfinance banks recognised by the programme as participating financial institutions. The CBN report showed that from November 2015 to March 2021, N615.4 billion had been disbursed to 3.04 million farmers out of which N152.3 billion was repaid.

It has been alleged that some non-farmers infiltrated the programme and obtained loans. This is one area that the apex bank should critically examine, notwithstanding the programme’s tripartite arrangement having the CBN, alongside the farmers’ associations and state governments, disburse loans to farmers.

As the debts are mounting, it behoves the CBN to activate a fool-proof debt recovery process to recover the loans. Its monitoring team should halt the trend to protect genuine beneficiary farmers and fortify the programme to achieve its purpose. The CBN must do everything to sustain the programme, including rigorous awareness drives among the beneficiaries.

It should fully involve the private sector to review the programme and set it on a firm footing. This is the scenario in India and Malaysia where “contract farming”, akin to the ABP, is revolutionising agriculture in those countries. The contract farming concept is effectively coordinated and identified loopholes blocked from inception.

Misinformation, cumbersome loan processes for some smallholder farmers, among other issues were identified as some of the problems facing the programme. The CBN should rethink strategies in this line. It is not enough to launch a laudable initiative and go to sleep. It is obvious that the ingrained political factors synonymous with the country’s national life have crept into the programme and efforts must be made to divorce it from such off-putting parameters.

At a point, the Chairman, Senate Committee on Agriculture, Abdullahi Adamu, urged the CBN to examine supervision strategies amid the rising debts threatening the programme’s stability.

The CBN governor, Godwin Emefiele, has also noted plainly that the sustainability of the ABP hinges on loan repayment. At the unveiling of the 2020 wet season harvest aggregation and inauguration of the 2021 wet season input distribution in the South-West in Ekiti State, Emefiele said, “Loan repayment is the hallmark of every credit cycle, and the sustainability of the programme is hinged on farmers’ ability and willingness to repay their loans, and we are constantly engaging with them to enhance their trust in the system.” But beyond the rhetoric, the CBN should take preventive measures; prioritise debt collection and follow-up tracking of defaulters.

By June this year, the CBN says it had rolled out a total of 37 intervention programmes aimed at salvaging different sectors. But corruption in all forms always negates government assistance. For example, the CBN’s more than N1.5 trillion intervention funds to power firms ended in dark tunnels, while the N120 billion aviation fund from 2011 disappeared into thin air. The N220 billion textile intervention funds did not revive textile firms from their comatose state.

The Carnegie Endowment for International Peace says big-budget CBN programmes have been largely wasteful, corruption-prone, and — most importantly — unsuccessful in tangibly developing Nigeria’s struggling MSME sector. It adds that, unwilling to internalise lessons learned from previous interventions, the CBN often repeats past errors and recreates already identified barriers to success. The bank also does not try to assess the impact of its programmes relative to their high cost and low uptake rates.

At the end of it all, there is a huge disparity between the real costs of CBN interventions and their economic benefits. For instance, most of the interventions come with other costs, especially on each programme’s administrative overheads and the interest the CBN charges financial institutions that participate as intermediary lenders for its programmes. Experts say the CBN’s programmatic guidelines tend to get “more complicated, less implementable, less clear, released in a less timely manner with each iteration.”

A new pragmatic approach is needed to make the CBN’s intervention programmes work. In states with records of ABP loan defaulters, the related farmers’ associations should make efforts to recover the debts, with concerted efforts from the state and the CBN. They should take a cue from the Niger State chapter of the Rice Farmers Association of Nigeria, which dragged some of its members to court for failing to submit paddy rice from their last season’s harvest as payment for the ABP loan they took from the CBN.

https://punchng.com/anchor-borrowers-and-cbns-wasteful-interventions/

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