Govt Should Not Fund Agric, It’s A Business – NIRSAL Consultant

The only way agriculture would advance in the country is when government stops direct funding of farmers and create enabling environment for private sector funding.

This view was expressed by Dr. Steve Ogidan, a development strategist and Consultant to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), in an interview with THE WHISTLER.

Dr. Ogidan, who is the National Coordinating Consultant for NIRLSA Project Monitoring, Reporting and Remediation Offices across Nigeria, said Nigeria must move away from the orientation of seeing agriculture as social service instead of its practice as business.

The NIRSAL Consultant, who is also accredited trainer of the World Bank with long standing consultancy experience in agriculture and water resources, stated that Agric financing is profitable if it is driven by the profit motive and the private sector.

“The issue is that government has no business funding agriculture. It is the private sector that should fund agriculture, and that is what NIRSAL has brought to the system. NIRSAL has de-risk agriculture to the level that private funding is now coming in.

 “Private sector is driven by profit motive and agriculture is a profitable business. So, once you create opportunity for profit, they will participate. The moment the private sector sees the profit motive, they will put in private fund. Whether we like it or not, government funding cannot be enough.

“And there’s a need to change this orientation from agriculture to Agric business. Is the government funding oil and gas? Is it funding fashion industry, and other sectors? If government is not funding all these other sectors, why should it be funding agriculture? Government should create the enabling environment where private funding into agriculture would naturally come from the commercial banks.

Responding to a question on how farmers can access credit facilities, Dr. Ogidan said there are many credit windows for farmers in the country including the ANCHOR Borrowers programme and the Agriculture, Small and Medium Enterprises  Development Fund of the Central Bank of Nigeria, but warned that advancing cash to farmers cannot guarantee farming success.

“The issue with the Nigerian farmers is that they don’t really want cash. They want loans-input loans, mechanization loans, logistics loans. And those are the ones NIRSAL has been able to provide for them. And that is why NIRSAL has come with the concept of the Geo-Cooperatives, putting the farmers together in a cluster of 250 hectares, and that is a volume that speaks to the economies of production, and they’re able to increase their production.

“The NIRSAL model is such that can transform the economic lives of the farmers to become millionaires within two harvest circles.

On whether Agric financing is sustainable in the country in view of loan defaults by many farmers, he said it is “very sustainable” not only in Nigeria but all over Africa if it is done the right way and not in small units.

“agricultural production failure does not happen in quick succession. It is only when the farmer fails in wet season and he’s unable to go back to production in dry season, that is when you have crop failure. If a farmer under the NIRSAL model fails in wet season, by the time he comes back in dry season with mechanization, irrigation, he will be able to pay back the loan.

“The NIRSAL model is working perfectly well. The credit guarantees that NIRSAL has given has a default rate of less than one percent. The model is such that NIRSAL will get the input producers to give the farmers the inputs. When the farmers harvest the crops, the farmers would pay back the loans.”

He revealed that over three million farmers have benefitted from NIRSAL projects in 2019, adding that many states in the country are using the NIRSAL to empower youths.

“Edo State government alone has created one geo-cooperative farm in each of the local governments of the state. And the harvest is going to take place this week.

That is a model the state is using to empower the youths in the state. And many of the other state governments are coming. Plateau, Bauchi, Adamawa and other states are already working on this.”

Dr. Ogidan who is also a microfinance bank expert said microfinance business is not being run in Nigeria properly to make it profitable.

“It is extremely profitable if we do it right. With the right model it is profitable because in Nigeria we have over 250 million people and the target of micro-finance is as much as 150 million people.

“Many of them are not running it the way it should be run. Many of them are doing commercial bank at a lower scale. And that cannot be profitable because micro-finance banks cannot match the technology and liquidity of commercial banks. But when you go to the rural areas where the farmers actually need the support of micro-finance banks you will see they’re very profitable.”