The Role of the CBN in the Development of Nigeria’s Agricultural Sector

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By Oluwatoyin Ajadi

“Because of global challenges, prices of food have gone up globally by at least close to about25 to 30 percent and what if, that’s what I keep asking myself, what if we did not embark on what we’re doing, is it in rice, is it in maize, is it in palm oil, what would we be saying?” (Excerpt from the CBN Governor, Godwin Emefiele, at the inspection of farmland cultivated and managed by Agro-allied limited in Edo state 7th March 2022).

Agriculture is a branch of the economy. In Nigeria, Agriculture was the mainstay of the economy and contributed immensely to the nation’s gross domestic product until the advent of oil in the ’70s. With the discovery of crude oil came a reduction in agricultural practices and dependency on oil which exists to date.

Nigeria has over 70 million hectares of arable land with cassava, maize, yam, beans, millet, and guinea corn as major crops.

The sector employs more than 36% of Nigeria’s labour force and contributes an average of 24 percent to the nation’s Gross Domestic Product.

In the third quarter of 2021, the agriculture sector contributed 29.94 percent, which is almost 30 percent of the total GDP in the period under review, also an increase of six percent from the 23.78 percent recorded in the second quarter of 2021.

Over time, the sector has encountered so many challenges, which have made it not as efficient as it should be. Some of the many challenges include poor access to credit, lack of basic tools, climate, poor storage facilities, and logistics problems.

Over the years, various governments have embarked on different agricultural policies such as “Operation feed the Nation, Green Revolution and the Agricultural transformation agenda, ” aimed at providing access to finance and providing basic needs such as fertilizer and seedlings to farmers.

 The Central Bank has been actively involved in supporting the Agric sector, and its intervention dates back to the 1970s with the introduction of the Agricultural Credit Guarantee Scheme Fund (ACGSF), which was designed to encourage banks to lend to farmers.

 As a result of the critical role agriculture plays in economic growth and development, the Apex bank has continuously come up with special initiatives to drive the sector’s growth and return it to a major contributor to GDP.

 Some of the intervention policies by the apex bank targeted, among other things, to increase the self-sufficiency of the nation in food production, reduce the importation of agricultural produce and export more include:


The Anchor Borrowers Programme, ABP

 President Muhammadu Buhari launched the program in 2015 to assist small-scale farmers in increasing the production and supply of feedstock to Agro-processors to create an ecosystem to link smallholders, farmers, to local processors.

Over time, the ABP has increased banks’ financing to the agricultural sector, enhanced capacity utilization of agricultural firms involved in the production of identified commodities, and the productivity and incomes of farmers.

 The anchor borrowers’ program has also assisted rural subsistent farmers in reaching commercial production levels.

As of January 2021, data from the apex bank showed that the CBN had disbursed N554.61 billion to 2,849,490 farmers to boost food security under the ABP since 2015.

In January this year, President Muhammadu Buhari, at the unveiling of stacked paddy rice pyramids produced by rice farmers under the ABP initiative, remarked that the programme had supported over 4.8 million smallholder farmers across Nigeria to boost the production of 23 agricultural commodities in the country.

And just about a month after, the CBN inaugurated an ultra-modern 420 metric tonnes per day capacity rice milling factory in Kano, Northern Nigeria.

The governor of the Central Bank, Godwin Emefiele, said the establishment of the factory under the ABP was in line with the government’s commitment towards ensuring food security in the country.

 Emefiele stated, “As we increase the milling capacity of rice nationwide, we are encouraging all rice mills to embrace our backward integration programme and get involved in paddy production to guarantee a sustainable supply of paddy to your mills and complement the supply from smallholder farmers.

 Data from the CBN also showed that before introducing the Anchor Borrowers Programme in Nigeria, there were less than ten functional rice-milling plants in the country, with a combined capacity of 350,000 metric tons.

Emefiele said, “these have increased to over 60 integrated mills, with a combined capacity of over three million metric tons, as at today, with about 10 more mills scheduled to be commissioned this year,”.

The Agricultural Credit Support Scheme (ACSS):

The Agricultural Credit Support scheme is an initiative of the Federal Government and the Central Bank of Nigeria with the active support and participation of the Bankers Committee.

The Scheme has a prescribed fund of N50 billion which is disbursed to farmers and Agro-allied entrepreneurs at a single-digit interest rate of 8.0 percent.

The introduction of ACSS enables farmers to exploit the unexploited potentials of Nigeria’s agricultural sector. The scheme also helps reduce inflation, lessen the cost of agricultural production, generate surplus for export and increase Nigeria’s foreign earnings.

The key agricultural activities covered under the scheme are:


Cash Crops: Cotton, Oil Palm, Fruit Trees. Rubber, Sugar Cane, Jatropha Curcas and Cocoa.
Food Crops: Rice, Wheat, Cassava, Maize/Soya, Beans/Millet, Tomatoes and Vegetables
Poultry: Broilers and Eggs Production
Livestock: Meat, Dairy and Piggery
Aquaculture: Fingerlings and Catfish
Processing: Feed-mills Development, Threshing, Pulverisation and other forms of transmutation for value addition.
Storage: Commodities, Agrochemicals and Warehousing.
Farm Input Supplies: Fertilizers, Seeds/Seedlings, Breeder Stock, Feeds, Farm equipment & Machinery.
Marketing: Agricultural commodities under the focal investment areas

Some of the features of the scheme include:

Single-digit interest rate (9% all-in, max).
Single obligor limit of up to N2billion for medium and large-scale private sector enterprises and N1billion for state governments.   
The participating private sector entity must have a minimum farm asset base of N50million (excluding farmland).
Irrevocable Standing Payment Order (ISPO) is required in the case of State Governments.  
Fund available till 2025.  
Loan tenor of up to 5 years.

ACSS applicants – practising farmers and Agro-allied entrepreneurs – are encouraged to approach their banks for a loan through the state chapters of farmers associations and State Implementation Committees.


Commercial Agriculture Credit scheme CACS

 This is another CBN initiative, which is termed a special credit intervention fund created by the Federal Government to fast track the development of the agricultural sector by providing credit facilities to commercial agricultural enterprises at a single-digit interest rate.

 It is a sub-component of the Federal Government of Nigeria’s Commercial Agriculture Development Programme (CADP) financed from the proceeds of the N200 Billion seven-year bond raised by the Debt Management Office.

The fund is made available to participating banks to finance commercial agricultural enterprises at a maximum interest rate of 9 per cent. In addition, each State Government could borrow up to N1Billion for on-lending to farmers’ cooperative societies and other areas of agricultural development provided such initiatives/interventions are in line with the objectives of CACS.

 Specifically, through this scheme, the apex bank has increased its lending to the agriculture sector to catalyze growth in critical sectors of the economy and create jobs.

Unlike the biblical proverb that says “Don’t praise yourself, let others do it,” the CBN governor, Godwin Emefiele has taken his time to do the praising as he commended the apex bank for its major role in revamping the agricultural sector under the foresight of President Muhammadu Buhari.

 He expressed delight that the Bank had assumed a key role since 2015 when President Muhammadu Buhari gave the order that Nigerians must produce what they eat and eat what they produce.

Because of global challenges, prices of food have gone up globally by at least close to       about 25 to 30 per cent and what if, that’s what I keep asking myself, what if we did not embark on what we’re doing, is it in rice, is it in maize, is it in palm oil, what would we be saying?”

On the socio-economic impact of the Bank’s interventions, Emefiele expressed delight that the Anchor Borrowers’ Programme (ABP) had transformed agricultural practice by providing credit facilities, in the form of inputs like seedlings, fertilizer, and herbicides, to smallholder farmers who before now cannot approach commercial banks for loans.

According to him, “those smallholder farmers can now cultivate and produce enough for their families and sell produce as loan repayment with ease, thereby generating employment, improving living standards, and creating wealth simultaneously.”

Looking ahead, with projections ranging from a 1.6% growth rate and between 2.2% and 2.6 percent in 2022 for Nigeria “s agricultural sector, it is expected that the growth would be mainly driven by the continuous programmes and policies of the apex bank geared towards raising production of grains and livestock.

This has become more imperative in the face of global challenges which affect food supply and also for agriculture to be at the front burner in the quest for diversification of the Nigerian economy being envisaged by the government because if the non-oil sector is to be the major contributor to the nations’ GDP, then it is expected that Agriculture takes the lead.

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