Nigeria: Impact of Anchor Borrowers Programme On the Economy - CBN

18 March 2019

President Muhammadu Buhari had observed that the Central Bank of Nigeria CBN -initiated Anchor Borrowers' Programme (ABP) will lift thousands of small farmers out of poverty and generate millions of jobs for unemployed Nigerians. These words of hope and confidence have materialized in millions of naira in the pocket of many of Nigeria's peasant farmers of yesterday.

Indeed, Emefiele has effectively driven CBN's command room to a stable exchange rate, moderated inflation and reduced import substitution regime in a period of fluid turf apex banking. Rightly, he deserves some accolades for keeping faith with the vision of President Buhari by demonstrating uncommon commitment and patriotism for home-grown products for the diversification of the productive and revenue base of the country's economy. He is, unarguably, changing it from one that was hitherto a mono to a multi-product economy and conserved her foreign reserve by curbing the appetite for imported goods that can easily be produced locally.

The CBN's Anchor Borrowers' Programme which has emerged to become the most successful of all government intervention programmes in recent history was launched by President Buhari in 2015. It is one of the intervention programmes for sustainable economic growth of the CBN. In his remarks at the launching of the agricultural programme and flag-off of the 2015 dry season farming in Birnin-Kebbi, Kebbi State, the President frowned at the huge sums spent by Nigeria on the importation of food items that could be produced locally, stressing that Nigeria's N1 trillion importation bill at the time was not sustainable.

Prior to introduction of the ABP, allocation of foreign exchange to the importation of items such as rice, wheat, milk, tomato, fish, cotton and fertilizer among others, had contributed greatly to the depletion of the nation's foreign reserves, especially in the face of low oil revenue resulting from falling oil prices. The implication was rising unemployment and escalating food imports. This prompted the CBN, under the leadership of Emefiele to shift from concentrating only on price, monetary, and financial system stability to act as a financial catalyst in specific sectors of the economy particularly agriculture; in a bid to create jobs on a mass scale, improve local food production, and conserve scarce foreign reserves.

The apex bank had set aside a portion of the N220billion Micro, Small and Medium Enterprises Development Fund to finance agricultural projects at a single-digit interest rate of nine per cent. Chiefly among the aims was to create economic linkages between over 600,000 smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization of integrated mills.

Noticeably, the gap between the levels of local rice production and domestic consumption has been reduced within a space of three years. Perhaps more than any other institution in Nigeria, the CBN has demonstrated a passionate commitment to the support of Small and Medium Enterprises (SMEs) in the Agribusiness value chain through its various development finance interventions and schemes.

Other areas the bank has distinguished itself also include: Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL); Real Sector Support Facility (RSSF); The Nigeria Electricity Market Stabilization Facility (NEMSF); Entrepreneurship Development Centres (EDCs); Youth Entrepreneurship Development Programme (YEDP); Export Stimulation Facility (ESF); Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS), Paddy Aggregation Scheme (PAS); Accelerated Agricultural Development Scheme (AADS); and the very successful Anchor Borrowers Programme (ABP) which has recorded an outstanding success in terms of reducing the nation's food import bills and boosting the income levels and financial capacity of local farmers.

At the last count, 200,000 smallholder farmers from 29 states of the federation are already benefitting from the N43.92 billion released through the CBN and 13 participating financial institutions to fund the agricultural programme.

As at October 2018, 2.5 million direct jobs had been created through implementation of the Anchor Borrowers' scheme, according to President Buhari. About 1 million more indirect jobs are believably created also. A total number of 862,069 farmers cultivating about 835,239 hectares of land, cultivating 16 different commodities including Rice, Wheat, Maize, Cotton, soya-beans, Poultry, Cassava and Groundnuts, tomato, in addition to fish farming had already benefited from the programme. The initiatives were undertaken in close collaboration with the states.

On the brag list of the current federal government today is the fact that the administration has produced over seven million 50Kg bags of fertilizer through the CBN intervention programme. "Eleven blending plants with a capacity of 2.1 million metric tons have been reactivated. We have saved $150 million in foreign exchange and N60 billion in subsidy. Fertilizer prices have dropped from N13, 000 per 50Kg bag to N5, 500," President Buhari had disclosed while pointing to some of the achievements of the ABP.

Another revolution, similar to what was recorded in the production of rice has started in Nigeria as the CBN has made good its promise to support massive tomato production in commercial quantity in the country.

Already, tomato processing plants have started springing up in parts of the country that would soon make Nigeria self-sufficient in the commodity, thanks to the support programme of the CBN. During a facility tour of Dangote Tomato Processing Factory and farms in Kadawa, Garun Malam Local Government Area of Kano State recently, Mr. Emefiele enthused that Nigeria now has a major Tomato processing Plant in Dangote farms, which he said has the capacity to meet nationwide demand of tomatoes in the country.

The good news is that the initial challenges encountered by the project have been overcome with the acquisition of greenhouses for the production of high yield seedlings with the collaboration of the CBN. Mr Emefiele therefore, expressed delight that "with the initial daily production of a million tomato nurseries alone, more people would be encouraged to embrace farming thereby creating jobs for our people along the entire value chain and reverse the exportation of jobs".

Apart from that, another N2 billion Gino Tomato processing plant and farm has sprung up in Kaduna State, owing to the support of the CBN's agricultural support Anchor Borrowers' Programme.

The plant has the capacity to mill 30 tons of fresh tomatoes a day. According to the Director, Corporate Affairs department of GBfoods, Dr. Teddy Ngu the whole land is about 100 hectares, while the farm area is about 30 hectares. He said about 16 hectares have already been cultivated, while the plan is to plant the entire area. "We plant in phases so that we can harvest in phases," he stated, explaining that the idea is to keep the factory running continuously. "In the long run, we are going to move to 3,000 hectares," he added.

The ban on 44 items from accessing forex from official windows, and deliberate standardization of agricultural products in Nigeria largely through the support of the Anchor Borrowers' scheme has long started making significant impacts on both home and external fronts. For example, the fourth quarter (Q4 2018) report on Nigeria's provisional Balance of Payments (BoP) estimates that was released a few days ago indicates a significant improvement as the country recorded a surplus of $2.80 million, compared to the huge deficit of $4.542 billion recorded the preceding quarter.

It had also recorded a surplus of $6.180 billion in the corresponding period of 2017, according to a "Brief on Balance of Payments Statistics for Fourth Quarter 2018," released by the Central Bank. A balance of payments surplus meant that Nigeria exported more than it imported during the period under review. What that means is that Nigeria is up again to play its role in global trade.

Furthermore, it is pertinent to mention here that so far, the overall impact of these interventions is the enhanced operational capacity of the SMEs that has translated into a reflation of Nigeria's economy with attendant growth and development.

From Kebbi, Ebonyi, Anambra and Cross Rivers to Kano States - among other parts of the federation, the ABP has given a good boost to local rice production, creating jobs and empowering many across the country.

Why It Started In Kebbi

President Buhari was in Kebbi to flag off the 2015/2016 Dry Season Rice and Wheat Farming as well as the CBN Anchor Borrowers' programme in 2015 which is a financing model assistance for small holder farmers in the country. The Anchor Borrower programme of the Central Bank of Nigeria was kick started to develop rice production in the country with Kebbi State as starting point and model. The CBN programme launched by president Buhari in Kebbi, provides a flat form for a tripartite collaboration between rice farmers, rice millers as up -takers and commercial banks. Under the programme, CBN provide loans to the farmers which will be accessed through commercial banks and rice processors. The selection of Kebbi for the programme was not by accident but for the fact the land of equity is in the forefront of the production of rice in the country and the prospect of other crops like Wheat, Sorghum, Millet, Sugarcane, Groundnuts and other arable crops are promising as acknowledged by President, the CBN, and other stakeholders in the farming sector. Kebbi State is blessed with rich agricultural potentials, large water bodies and favourable climate conditions for diverse agricultural production which employs more than 80 per cent of our people.

An investigation carried out by LEADERSHIP revealed that large chunk of the farming communities engaged predominantly in rice and wheat farming taking advantage of only 36.46 per cent of the estimated land area out of 37,698.69km. This indicates that the there is still large expanse of land that can be converted to agricultural use. According to 1968 FAO survey , the state is endowed with 420,000 hectares of Fadama land out of which 170 ,000 hectares have shallow extractable aquifers suitable for year round irrigation. Kebbi has also sizable water bodies which support irrigation and fisheries activities with 50 per cent of the total Fadama land on the banks of Rima River, 34.7 per cent on river Niger, 4.1 on Zamfara River while remaining 11.2 per cent are on minor tributaries. These endowments have made the state a major supplier of rice, fish, groundnuts oil and vegetables especially onions. Perhaps also Kebbi's promising position in agriculture especially rice farming attracted President Buhari's attention to use Kebbi as a model of his administration's agricultural policy and economic diversification agenda largely because the international or global oil market is no longer dependable. President Buhari spearheaded the zeal of federal government in agricultural production and transformation when he led the campaign for rice production in Kebbi. The CBN Governor, at the event, said that the programme was designed to create economic linkages between farmers and processors, not only to ensure agricultural output of rice and wheat but also close the gap between production and consumption. The CBN boss further explained that over 200,000 rice and wheat farmers will benefit from the scheme ranging from N150, 000 to N250, 000 and to assist in procuring necessary agricultural input. The CBN's Anchor Borrowers Programme, according to Mr Emefiele, which kicked started in Kebbi was also targeting to change Nigeria from a major importer to a major exporting country as well as provide food security for the nation.

Governor Abubakar Atiku Bagudu assured that the state has the capacity and potential to produce rice and wheat for both domestic and external consumption. Kebbi State has demonstrated full commitment in helping farmers to achieve maximum production of food especially rice within the last four years. Bagudu has demonstrated a lot of political commitment and support for the overall success of the programme by also supporting farmers with input, fertilizer, financial assistance to flood ravaged farming communities and aerial spray against birds and insects which runs into millions of naira.

The success story of the Anchor Borrowers programme in Kebbi State is glaring in spite of some challenges it faced. It has recorded an achievement that surpasses the one million tonne of rice production target in the second year of introducing the scheme. This was as a result of many people including civil servants, women and youths who went back to the farms and engaged in rice production.

Another major achievement was the springing of private rice mills in the state paving the way for more investment flow. Both Big and mini rice mills have been established in the state all owned by private investors. The state can boast of two large modern rice mills now, the Labana Rice Mills and Wacot .This is apart from many mini rice mills being established by private individual farmers across the state. It will recalled that the state witnessed the commissioning of Labana Rice Mills Limited by the Hon Minister of Agriculture and Rural Development, Audu Ogbeh. The rice mill provides high quality parboiled rice for not only Kebbi but Nigerian populace. It was specially designed with sophisticated machinery from Switzerland.

The massive rice farming under the CBN Anchor Borrowers programme has turned around the lives of many farmers to becoming rich. In fact, in the second year of the programme, majority of the Muslim faithful who went to Saudi Arabia on Holy Pilgrimage to Mecca were farmers who got their money from the sale of their rice. Apart from that, many other farmers got married or boost their businesses with the proceeds they got from their rice. All these are clear testimony of how many farmers in Kebbi became millionaires from the rice farming venture. Nafiu Bashar (32) is a young farmer in Birnin Kebbi which used the fortune he got from his rice farm to marry a second wife " Yes it is obvious that young men like me who took this advantage of growing rice,really reaped the benefit because it is from my rice sells that I got the money to marry a second and now I am planning to go to the holy pilgrimage. You can call me a young millionaire. " Women too are not left out of the success story, Hajiya Suwaiba Aliyu although a widow with three children said she picked up from what her husband left before he died some four years ago " I used to prepare food for him and take it to the farm and I watched how he worked in the farm. So when he died I took up the challenge and obtained the "Anchor Borrowers loan package. Initially in my first harvest I didn't record much from my two hectares of land but in the second season it kept on multiplying", she said.

On his part, the Chairman of Rice Farmers Association Kebbi State chapter, Alhaji Muhammad Sahabi opined that the Anchor Borrowers Programme in Kebbi is very successful as it assisted farmers to enhance their businesses since it was introduced four years ago. "The Anchor Borrowers Programme has largely been a success in Kebbi State, we have more people who were not rice farmers before now venturing into the activity and that has gone along away in contributing to the overall rice production in Nigeria. As you know Kebbi State is the largest rice producer in Nigeria", he said. The Chairman also suggested how the programme can be improved to accommodate more people as well as enhance the quality of the product. He made a passionate request to CBN and all the stakeholders involved in the system. "Expand the programme to increase the number of farmers who can actually benefit from the scheme, I know that in the first year, we covered over 75,000 farmers in Kebbi. Efforts should be geared towards expanding the programme so that it will accommodate more farmers especially large scale farmers, because Anchor Borrowers as it is designed now is meant only for small scale farmers with about 1 to 5 hectares in the maximum .In Kebbi State we have more farmers who have lands as large as 100 hectares or more and these farmers want to be included. I also want the programme to include simple farm machineries to do away with issues of drudgery in rice farming. As at now most of the work is done manually using hands and I know our technology can address such issues of manual labour. We have small machines that can transplant rice, harvest and even thresh rice. So I want it to be introduced to small scale farmers to use them as alternative to manual labour", he said.

The Anchor Borrowers Programme was established by the Central Bank of Nigeria CBN to fast track the development of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate. It is a programme that aims at enhancing national food security, increasing output, and generating employment as well as diversify the revenue base of the economy. It has recorded tremendous success in Ebonyi State.

According to the Ebonyi State Commissioner for Agriculture and Natural Resources, Chief Ogodo Ali Nome, in 2016, the state accessed N2billion, another N3billion in 2017 while in 2018 another N5billion was accessed adding that with the funds released, the state now produces over 1.2 million tonnes of rice annually.

Chief Nome noted that currently, the state has over 72,000 hectares of rice plantation with a target of six tonnes per hectare production and added that the loan was judiciously used to support farmers, especially, those involved in rice production.

The Commissioner noted that the N2 billion loan secured in 2016 went a long way in giving thousands of Ebonyi farmers the enablement to scale up their participation in the rice revolution.

He pointed out that the loan, in no small measure, assisted in lifting many families from abject poverty and became a source of empowerment to many of the youths who would otherwise have remained jobless and a threat to the society.

In one of the Agriculture summit held at the Akanu Ibiam International Conference Centre, Abakaliki where hundreds of farmers who benefited from the CBN/Ebonyi State Anchor Borrowers programme converged to narrate their success story, Governor Dave Umahi said:"We want to domesticate rice production in Ebonyi State and we are going beyond individual production. We are now beginning to see how we can institute what we call rice mega cities in each local government area where by we have 5,000 hectares of land dedicated for rice production in each of our local government areas.

"Already, we have four rice mills that are in operation and you also see private people that are milling with their traditional machines. We are planning to cultivate 100,000 hectares of land to produce 400,000 tonnes of rice in the next two years.

"On behalf of the good people of Ebonyi State, let me express my most profound gratitude to the Governor of the Central Bank of Nigeria, Mr Godwin Ifeanyi Emefiele;, the Governor of Kebbi State, His Excellency, Abubakar Atiku Bagudu, and to the Honourable Minister of Agriculture and Rural Development, Chief Audu Ogbe, for the friendly cooperation and professional partnership that you have extended to the farmers of Ebonyi State".

I must also express deep appreciation to the very professional and competent staff of the CBN, particularly those who have been connected in one way or other with the Ebonyi rice revolution. The evolving partnership between our farmers and the apex bank, especially in respect of the Anchor Borrowers scheme, could not have gained traction but for the professionalism and dedication of the staff of the Bank who have tirelessly and patiently engaged our farmers at every turn in the laborious process.

The significant progress that we have made in our determination to raise the quantum of rice produced in Ebonyi State from a modest annual average to a projected 190,000 metric tons of rice paddy could not have been possible without the financial support of the CBN".

"It has, above all, made our dream of food security a realistic one. The Bank filled a major gap for us. Although we needed and still need more, but what we got was precisely what has made it possible for our farmers to cultivate more than 30,000 hectares of land during the wet season of 2016".

According to the Commissioner, in 2016, the State government accessed the sum of N2billion and procured farm input which include, Rice seedlings, Cassava stem, fertilizer for rice and cassava production and urea. In 2016, the state according to the commissioner through the scheme procured 40 tractor machines which were given out to farmers on hire basis. He stated also that in 2016, a total of 14, 662 rice and cassava farmers benefitted from the scheme. He further disclosed that in 2017, the state government accessed another N3billion from the CBN scheme while in 2018, another N5billion was also accessed adding that between 2017 and 2018, 30,000 farmers benefitted also from the farm inputs.

The Commissioner said that apart from the farm inputs which was distributed to the farmers through their associations and cooperative societies, each of the farmers was also given the sum of N25, 000 for land preparation.

In an interview with some of the beneficiaries of the Anchor Borrowers scheme in Ebonyi state, the State Chairman, Cassava Growers Association, Mr. Paul Njoku said that the group joined the programme in 2018 and expressed the confidence that they will record bumper harvests in cassava cultivation and attributed the development to the pragmatic agricultural policies put in place by the Central Bank of Nigeria in collaboration with the Governor David Umahi- led administration in the state.

Mr. Njoku said that before the inception of the present administration, such scheme existed but regretted that the funds usually end up in the pockets of politicians and their cronies and added that the present administration through the Agricultural summit convened by the state government identified genuine farmers and cooperative societies and dealt directly with them instead of allowing politicians to embezzle the funds.

He said that there has been tremendous increase in the number of farmers cultivating cassava in the state pointing out that the number of farmers who have indicated interest to join the programme for the 2019 scheme has already tripled. He stated that many youths in the state are now self-employed and are no longer looking for white collar job in the cities of Nigeria.

The Ebonyi State Chairman of Farmers Co-operative Society, Mr. Godwin Aka who was a signatory to the procurement of the loan scheme for government in 2016 said that rice farmers, millers and rice distributors in the state since 2016 have been counting their gains and could not have wished for a better programme.

Mr. Aka who commended the Federal government for the ban on importation of foreign rice said that apart from the enhanced patronage of local rice, which had boosted the economic status of rice farmers, the price of the product has stabilised and might even fall drastically due to massive production in the state.

According to him: "since the commencement of the scheme and the sincerity of purpose on the part of the state government and the Central Bank of Nigeria, there has been a tremendous improvement in the production of rice and other commodities in the state. Apart from Rice production, many farmers have ventured into Cassava cultivation, Yam, palm seedlings and even livestock.

The scheme, in no small measure, has prompted the stability of price of rice in the state without fluctuating. There is no gainsaying it that the ban on importation of foreign rice into the country has also provoked an increase in the consumption of local rice, thereby triggering massive production. A visit to the Abakaliki Rice Mill will convince anyone that both the rich and the poor now testify to the natural taste of the locally produced rice". Before now, consumption of foreign rice is seen as a luxury, even those who cannot afford it go as far as borrowing to buy foreign rice but today the Federal government initiative with the encouragement of the CBN loan scheme has changed the narrative. The increased patronage has made us to produce more rice," he said.

As the Chairman of Farmers Co-operative Society, we meet at different fora to brainstorm on the way forward and from our observation, the story has been the same in other parts of the country, as there has been dramatic increase in quantity of rice produced by rice farmers across the country".

The Chairman of Ebonyi State Rice Farmers Association, Mr. Uchenna Mbam said that the state government met the target of producing 350,000 tonnes of rice, which it set for the 2016 farming season adding that in 2017 and 2018, 500, 000 tonnes of rice are projected.

He stated that the state was able to achieve that feat because the state government invested massively in rice production in 2016, 2017 and in 2018 farming season. The Chairman Rice Farmers further pointed out that the government's determination to revolutionise rice production in the state was because of its comparative advantage over other states in the area of rice farming adding that efforts were underway to ensure that Ebonyi reclaimed its position as the highest rice producing state in West Africa.

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