Farmers’ ₦518bn default shows anchor borrowers underbelly

The failure of farmers in Africa’s biggest economy who benefitted from the Anchor Borrowers Programme to repay about N518 billion extended to them by the Central Bank of Nigeria (CBN) underscores the weakness in the intervention initiative.

The N518 billion accounts for 47.4 percent of the total N1.08 trillion the apex bank disbursed to farmers under the intervention programme since 2015 when it kick-started.

BusinessDay learnt that many beneficiaries who got the ABP loans were not actual farmers and those who were farmers often saw the money as their share of the country’s national cake.

“Most of the beneficiaries who got the loans were not farmers. Keke nape drivers were getting the ABP loans meant for farmers. You can ask people in communities where they disbursed the loans for confirmation,” Abiodun Olorundenro, manager of operations, Aquashoot Limited.

“Majority of the actual farmers that got the loans are not willing to pay back. They believe that is their part of the national cake,” Olorundenro said.

Also, Yunusa Yabwa, national secretary of All Farmers Association of Nigeria (AFAN) in March alluded that the loans were not disbursed adequately, hence the difficulty in ensuring repayment.

Yabwa said that the programme was abused, adding that it did not meet expectations to boost food production.

He alleged that most beneficiaries of the programme were not farmers. “Many people collected the loan to invest in other projects, not farming, and that is why it is difficult to ensure repayment.”

“The anchor borrower is a laudable programme but there are challenges of recovery. Some of our members benefited from it, but most people that benefited are not farmers.”

Musa Mohammed a rice farmer in Kebbi said he initially taught the loan what a gift from the government to support farmers to boost production.

“Initially, I taught it was a gift to support us in boosting our productivity and later after farming with it for a season we were now informed it’s a loan,” he said.

“I wanted to pay back but I noticed that several of my fellow farmers were not paying so I decided not to as well,” he explained.

He added that the loan is the first thing he has benefitted from the government despite being a farmer for over two decades.

Launched in 2015, the ABP scheme was aimed to provide farmers with the critical funds and inputs needed to increase local production.

In eight years it has disbursed loans to about 4.57 million smallholder farmers across the country who cultivated on over 6.02 million hectares of 21 commodities with rice benefitting the most, according to the apex bank.

Despite the investments, yield per hectare in Nigeria has remained low compared with other emerging economies.

Nigeria’s yield per hectare for rice is 3.4, whereas it is 6.3 in Brazil, 3 in Ethiopia, 2.8 in South Africa, and 4.2 in Kenya, according to data from the FAO.

Also, growth in the sector through the eight years of the intervention programme was inconsistent.

The sector recorded 3.72 percent growth in 2015 when it was launched and a growth rate of 1.8 in 2022 when funds were last disbursed to farmers. The figure is also the lowest in the eight years.

Read also: Farmers struggle with rising inputs cost

According to experts, the poor outcome of the intervention programme is an indication that the continued focus on supporting farmers with finance without addressing lingering issues will only drive inflation and not boost productivity.

“Government agric interventions should focus on providing the right infrastructure to reduce production cost, spur investments and address the ease of doing business rather than cash handout for farmers,” Olorundenro said.

Ibrahim Kabiru, national president of AFAN said the government is not directly supposed to be involved in the disbursement of loans to farmers but through appropriate associations with clear guidelines

According to him, this would ensure constant monitoring and evaluation as well as ensure the funds get to the real farmers.