The central bank of Nigeria recorded a deficit of 378.5 billion naira in the repayment of loans by beneficiaries under the principal borrower’s program in six years, according to data obtained from the findings of the apex bank .
Between November 2015, when the ABP program was introduced, and November 2020, the CBN executed a total of 2.3 million projects under the program and paid out 497.2 billion naira to farmers.
However, data obtained from the CBN’s fourth quarter 2020 economic report showed that only N118.7 billion was repaid by beneficiaries during the review period.
The President, Major General Muhammadu Buhari (retired), launched the ABP on November 17, 2015 with the aim of reversing Nigeria’s negative balance of payments on food.
The beneficiaries of this program are farmers growing cereals (rice, corn, wheat, etc.), cotton, roots and tubers, sugar cane, tree crops, legumes, tomatoes and livestock.
Loans are disbursed to beneficiaries through deposit banks, development finance institutions and microfinance banks, which the program recognizes as participating financial institutions.
According to the CBN, the overall objective of the program is to create economic links between smallholders and reputable large processors with a view to increasing agricultural production and significantly improving the capacity utilization of agricultural enterprises.
A quick review of the agricultural sector shows that the scheme may have had a positive impact on the sector as the overall production of the sector has maintained an upward trajectory throughout the review period.
An analysis of gross domestic product reports from 2015 to 2020 found that the total output of the agricultural sector increased from 19.5 billion naira to 37.3 billion naira, indicating a 91.2 percent increase. .
Between 2015 and 2016, the overall production of the sector increased from 19.5 to 21.4 tons of dwarf, it increased to 23.9 tons of n in 2017, 27.4 tons in 2018 and 31.8 tons in 2019 .
It was observed that during the review period, the agricultural sector sub-activities on which the PBA program focuses, such as crop production and animal husbandry, also recorded an increase in economic performance.
For example, between 2017 and 2020, agricultural production recorded an increase of around N12.1tn, from N21.1tn in 2017 to N33.2tn while animal production increased from N1.9tn to N2.1tn, indicating an increase in N2bn.
Likewise, in the first quarter of 2021, the agricultural sector increased from 14.03% to 15.14% quarter on quarter, with crop production being the main driver of the sector.
The National Bureau of Statistics noted: âThe (agricultural) sector grew 15.14% year-on-year in nominal terms in the first quarter of 2021, posting a decrease of 7.33 percentage points from the corresponding quarter of 2020 but an increase of 1.11 percentage points. compared to the growth rate of 14.03 percent in the previous quarter.
âCrop production has remained the main driver of the sector, as it represents 71.69% of the overall nominal growth of the sector in the first quarter of 2021.
âAgriculture contributed 21.42% to nominal GDP in the first quarter of 2021. This figure was higher than the rates recorded for the first quarter of 2020 but lower than the fourth quarter of 2020 which recorded 20.88% and 24.23% respectively.
While the experts, who reviewed the program and its impacts, praised the CBN for initiating ABP, however, they highlighted insecurity as the main factor militating against the effectiveness of the program.
Economist and CEO of SD&D Capital Investment, Gbolade Idakolo said: âThe ABP program is a commendable program. But the end result was marred by the problem of insecurity linked to the peasant-pastoralist crises.
âMost of the farmland has been invaded by pastoralists, which has made farmers unable to repay the loans acquired.
“So that’s why you see that according to the just released consumer price index, food inflation continues to rise because farmers are not producing optimally and even those who are producing due to insecurity they are not able to transport their produce to markets where they can be sold. This leads to a shortage which increases the cost of food. ”
He added that the effectiveness of the program was also hampered by sectionalism and the uneven distribution of loans among regions of the country.
Another expert and managing director of Cowry Asset Management Limited, Johnson Chukwu, shared a similar view with Idakolo, adding that without adequate security for farmers, the funding provided by the CBN through the ABP program would not yield results. significant in the agricultural sector. .
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