Business
CBN’s N700bn interventions strengthen diversification drive
By EMEKA EJERE
The sustained efforts by the Mr. Godwin Emefiele-led Central Bank of Nigeria (CBN) to support the federal government’s drive to diversify the nation’s economy through various interventions are yielding dividend.
In a bid to develop other sources of revenue as well as protect the economy from perennial shocks occasioned by any drop in crude oil price, the federal government has been paying more attention to the agricultural sector among other non-oil sub-sectors of the economy.
The initiatives and intervention schemes, according to the apex bank, can broadly be classified under sectors of agriculture, manufacturing, micro, small and medium scale enterprises, power and energy and banking.
Agriculture is globally recognised as a key catalyst for creating jobs, ensuring food security and driving growth in Nigeria. With favourable climatic conditions, vast arable land and fertile soils, the country’s quest to achieve sustainable development has its end in agriculture.
Little wonder the CBN, through its Anchor Borrowers’ Programme (ABP), under its development finance function, has continue to seek for ways to support operators in the agricultural sector in order to create job opportunities and help preserve foreign exchange.
The pilot phase of the ABP with rice cultivation that commenced in Kebbi State in 2015 had proven to be a success, hence the extension to other states.
Last week, the CBN inaugurated a committee in all local governments in the Northeast to recover N36bn loans facilities advanced to benefitting farmers through the Northeast Commodity Association. The ABP was designed and introduced by Governor Emefiele to assist small scale farmers increase the production and supply of feedstock to agro-processors.
The programme is aimed at creating an ecosystem to link out-growers (small holder farmers) to local processors, increase banks’ financing to the agricultural sector, enhance capacity utilisation of agricultural firms involved in the production of identified commodities as well as the productivity and incomes of farmers.
Data release recently by the National Bureau of Statistics showed that the ABP was one of the reasons why the non-oil sector’s contribution to the country’s Gross Domestic Product (GDP), improved.
Specifically, the non-oil sector contributed 92.94 per cent to real GDP in the fourth quarter (Q4) of 2018, slightly higher than the 92.65 per cent recorded in Q4 2017. The sector grew by 2.70 per cent in real terms within the period under review. This was 1.25 per cent higher than the growth rate recorded in Q4 2017, and 0.38 per cent higher than the growth rate recorded in Q3 2018.
On an annual basis, the non-oil sector recorded a growth rate of 2 per cent in 2018, performing considerably better than 0.47 per cent in 2017. For 2018, annual contribution of the non-oil sector was 91.40 per cent compared to 91.33 per cent in 2017.
A breakdown of the sectoral contribution to growth showed that agriculture contributed 26.15 per cent to overall GDP in real terms in Q4, compared to 29.25 per cent in the preceding quarter but slightly higher than the 26.13 per cent recorded in Q4, 2017.
Disbursement under ABP
The CBN recently said it has so far cumulatively disbursed N174.48 billion through 19 financial institutions under the programme since 2015.
The director, corporate communications department of the bank, Mr. Isaac Okorafor, said the programme had supported 902,518 farmers working with 194 anchor companies. He said the scheme has so far created 2.8 million and 8.4 million direct and indirect jobs respectively.
Mr. Okorafor explained that the scheme initiated in 2015 was to facilitate access to credits in various sectors, adding that the bank had supported several interventionist programmes including the micro, small and medium enterprise development facility, Commerce Agricultural Credit Scheme that had contributed to economic growth.
Emefiele had in his appraisal of the ABP stated, “The ABP programme ensures that Nigeria emerges from being a net importer of foods such as rice, to becoming a major exporter of rice; supplying key markets in neighbouring countries.
“For instance, the data from the Thailand Exporters Association indicates that in 2012, about 1.2 million metric tonnes of rice was exported to Nigeria, however, in 2016 which is the first one year of the implementation of our anchor borrowers scheme, rice import to Nigeria had dropped to less than 1000 metric tonnes.
“Activities in the manufacturing sector also witnessed a significant improvement as the Manufacturing Purchasing Managers’ Index grew in 23 consecutive months, from 42 points in August 2016, to about 57 points in February 2019. This development was attributed to the sustained supply of foreign exchange and the stability of the naira.”
Also, former minister for Agriculture, AuduOgbeh, had described the ABP as revolutionary. According to Ogbeh, with the ABP, rice revolution has started in the country. Ogbeh noted that the ABP remains one of the greatest achievements by the CBN in the last 50 years.
Ogbeh argued that it does not make any economic sense to continue to spend scare foreign exchange resources on rice importation and other produce the country has huge potential to grow in commercial quantity, noting that each ship load of rice imported into the country displaces 12, 000 farmers from employment. According to him, the CBN ABP initiative is making rural dwellers rich.
Other agric sector interventions
Also in the agricultural sector, the CBN has, through other schemes, continued to support farmers.
For instance, the total amount released by the apex bank under the Commercial Agriculture Credit Scheme (CACS) from inception to the participating banks for disbursement stood at N596.44 billion for 576 projects as at the end of the fourth quarter of 2018. Of the total number of projects, 34 were in respect of state governments.
This was contained in the CBN Economic Report for the fourth quarter of 2018, released recently. A total of N852.15 million was guaranteed to 5,454 farmers under the Agricultural Credit Guarantee Scheme (ACGS) in the fourth quarter of 2018.The amount represented a decrease of 40.1 per cent and 5.9 per cent below the levels in the preceding quarter and the corresponding period of 2017, respectively.
The report noted that the cessation of rainfall led to widespread dryness of severe to extreme intensity across the country in fourth quarter of 2018. Generally, the predominant agricultural activities during the review quarter were the harvesting of tubers, grains and vegetables, while pre-planting operations in preparation for dry season planting commenced.
In the livestock sub-sector, farmers engaged in the fattening of cattle and stocking of broilers to take advantage of yuletide season sales.
Sub-sectoral analysis of the ACGS showed that food crops got the largest share, amounting to N369.54 million (43.4per cent), guaranteed to 2,373 beneficiaries; followed by mixed crop sub-sector, which received N162.75 million (19.1per cent), guaranteed to 1,710 beneficiaries N138.44 million (16.2per cent) was guaranteed to livestock sub-sector in favour of 564 beneficiaries; while cash crop, fisheries and ‘others’ sub-sectors got N105.28 million (12.4per cent), N58.82 million (6.9per cent), and N17.32 million (2.0per cent), guaranteed to 542, 175 and 90 beneficiaries, respectively.
Analysis by state showed that 30 states and the Federal Capital Territory benefited from the scheme with the highest and lowest sums of N95.83 million (11.3 per cent) and N1.99 million (0.2 per cent) guaranteed to Ogun and Bayelsa states, respectively.
Manufacturing intervention
The CBN has also intervened in the area of re-financing and restructuring of banks’ loans to the manufacturing sector to the tune of N235 billion.
The objectives of the fund are to fast-track the development of the manufacturing sector of the Nigerian economy by improving access to credit to manufacturers and improve the financial position of the Deposit Money Banks (DMBs).The fund is also intended to increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.
Power and airline intervention
One of the objectives of the N300 billion CBN’s Power and Airline Intervention Fund is to:fast-track the development of electric power projects, especially in the identified industrial clusters in the country.The fund is also intended to fast-track the development of the aviation sector of the Nigerian economy by improving the terms of credit to airlines;
It is also intended to improve power supply, generate employment, and enhance the living standard of the citizens through consistent power supply as well as provide leverage for additional private sector investments in the power and aviation sectors.
Commenting on the CBN interventions in a telephone interview with Business Hallmark, a senior lecturer at Lagos Business School, Dr. Bongo Adi, said most of the CBN intervention policies that have to do with diversification are too early to call.Dr. Ade said policies of that nature are supposed to last for about 18 months from the beginning of implementation before any reliable appraisal can be made.
“However, the CBN should be careful in order not to create another problem while trying to solve one”, he cautioned.
A Port Harcourt teacher, Mr. Moses Omolade, said the interventions are real, but regretted that so many farmers are denied the agricultural loan facilities by those who divert them.
He said, “These things work. It has always been there. My father benefitted from it in those days. In my area, Ondo State, people still benefit from agric loan by buying engines and fishing nets at subsidized rates.
“My people are farmers and fishermen fishing in deep Atlantic Ocean. These things go to all states but some people divert what belongs to their states
“The Nigerian factors come in where there are no strong civil society movements or agitators for what is due to the people.”
When asked if the beneficiaries have been sincere with refund, he said:
“At times, they do not refund all. Even when they refund, managers of the fund at the state and local levels do not always remit to CBN or appropriate quarters.
“See, these things are many like Commonwealth scholarship, Oil Companies scholarships, NDDC scholarship, the list is endless. In my former school, a teacher got 10million without collateral. He has his school now.
An Owerri based commercial farmer, Mr. Mike Akwa, said he is aware of the CBN interventions but has not benefitted from them.
He said, “I have not benefitted from it. I’m still surveying my farm because that is a condition you have to meet to be eligible for the loan.
