The Managing Director and Chief Executive Officer, Bank of Agriculture, Prof. Danbala Danju, in an interview with journalists, says rice importation will soon end in Nigeria.
What is the Anchor Rice Borrower programme of the current government all about and how will it impact on the nation’s economy?
The Anchor Rice Borrower programme is aimed at boosting domestic production. The country has been importing rice and because of the foreign exchange and the focus of the new administration to try to convince Nigerians to go into farming, the Central Bank of Nigeria and Bank of Agriculture came up with the Anchor Rice Borrower programme.
In the case of Kebbi State, we have pilot programmes because some of the commercial banks did not consider this as profitable. The Bank of Agriculture is the best place to be because it is a specialist agricultural development bank that is over 42 years old and has more than 137 branches across the 36 states of the federation.
Each farmer has a budget of about N210,000 per hectare disbursement, which is in two forms and largely, they are given inputs like seeds, fertiliser, pumps and about N49,000 as working capital. Then you have to consider labour for land preparation and day to day management of the rice production. Not all the 75,000 farmers we targeted collected the average amount of N210,000 per hectare because some of them had their water pumps or other inputs. But on the average, each of the farmers was targeted to receive N210,000 in estimated cost of cultivation of a hectare of paddy during the dry season. We targeted to have more than 300,000 metric tons of rice being produced over the dry season period. And because of the success of the pilot scheme in Kebbi, the Federal Government has directed that we work closely with the Central Bank of Nigeria to target about 13 states in the programme as well as in wheat production, tomato and other staple crops.
Primarily for now, the focus is on rice to help achieve the current objective of self sufficiency in domestic rice production in about one to two years which President Muhammadu Buhari has promised the country. The Bank of Agriculture is the main implementing agency. We have our workers, who are being spread all over the country, particularly in the 13 states of the federation. We are targeting different heritage farmers to achieve domestic sufficiency in rice and other crops. In a couple of weeks, we are targeting about 300,000 farmers that would be supported under the programme to produce paddy. We are entering into some agreements with off-takers, largely private sector millers, and in some cases, state governments.
You said that the programme is meant for small scale farmers, how do you ensure that the big time farmers do not hijack it?
There is a farmers’ registration. All the farmers had to register with the Bank of Agriculture. We have to collect their biometric and in addition to that, we issued them with BVN so that we can have the identity of the farmers. The target is for the small scale farmers who have an average farmland of one hectare to a maximum of five hectares. This is what we have been doing and this is what we are going to do. There is a private company that is partnering with our bank to properly register and identify the farmers to avoid duplication.
For the large scale famers, we are coming up with a special facility for them under a new arrangement for funding agriculture in our country. They have a different interest structure; it is a different instrument that we are using. Under the programme, we are largely targeting the smallholder farmers. Like I have said, there is a rigorous identification system, which requires farmers to register with our branches, and they need to have BVN before they can be given inputs in terms of seeds, fertilisers as well as working capital. So far, it has been quite successful and that is why we are trying to replicate it in other parts of the country.
How has the programme been received in crises prone areas like the North-East and recently the Niger-Delta?
We did not start at once in all the states of the federation; we started in Kebbi and we learnt from that. We are now strategising on how to target 13 states of the federation with respect to rice. The lessons are very clear from Kebbi; we need robust farmer identification. In the past, people would collect money and then divert it for other purposes; this time round, we are disbursing mainly in kind. We give farmers high quality seeds, pesticides, fertilisers and some kind of training to make sure they adopt the correct agronomic practices in order to have the expected yields.
Traditionally, they used to have one ton of paddy per hectare, but with the new high seeds given to them as well as better agronomic practices, they now could have five tons per hectare, which is an improvement. So they are able to make lots of money. They can now pay us back and we can recycle to reach more farmers.
So, what we have started with is the pilot programme, which is now going to be scaled up in all the states of the federation that have comparative advantage in rice production.
You talked about measures to avoid diversion of funds, but what are you doing to prevent the diversion of produce?
In the past, people would have been given N210,000 per hectare, asked to buy their inputs, do what they want and then come back and pay. Now, under the current programme, we don’t pay farmers directly. Before we give money to farmers, we first have to identify who the farmers are. And once farmers are identified, they register with the bank and there is a committee made up of our representative, farmers’ representatives – the Rice Farmers’ Association of Nigeria, and the off-takers, so that we identify who the farmer is. We have got quality inputs and other seeds company that supply farmers with high quality inputs. So this way, we don’t give money, we give farmers the inputs they need and the inputs are high quality from very quality sources.
The only money we give them is largely about one-fifth of the amount, which is for land clearing, preparation, weeding and transportation. And the money is also given out in instalments; we don’t give all at a go. There are stages; we have the land preparation stage and planting stage. We don’t also give the inputs at once. For instance, fertilisers or pesticides are given at different stages in the production process. So, it is a controlled process.
Do you think this programme is sustainable?
The sustainability of this programme, first of all, is in the module. For a programme to be sustainable, it has to be financially profitable. Farmers in the past had no guaranteed source of credit, now if you’re registered with the Bank of Agriculture, you’ll have the credit to produce your paddy. In the past, they had no guaranteed market, no off-takers. So now that they are registered and they have a ready-made market, the ban on importation of rice makes it very lucrative for them (farmers).
We hope that the Federal Government would sustain the ban on importation of rice because if you open the gate to importation of cheaper and subsidised rice from other economies, it will undermine the profitability of existing rice mills and in turn the profitability of the out growers. So, we hope that the issue of ban on importation of rice would be sustained, and also issues of exchange rate will be handled well. Curiously, an overvalued exchange rate makes it cheaper to import rice, but if we allow for a more realistic pricing of foreign currency or a more appropriate value for the naira, it is good for farmers because instead of importing, they will be encouraged to produce more.
Also, I think there is the question of infrastructure. As we are producing rice currently, the productivity must be enhanced. In this case, more research in terms of output of the seeds. We need high yielding seed varieties of rice and we also need to provide the irrigation, transport infrastructure and the capacity of existing rice mills need to be expanded and new ones established. If we are able to implement all these measures, I think not only will we be able to achieve domestic self-sufficiency but we will also be able to export to other countries in less than two years.
How much are you giving out in the project?
We started during the last dry season, but I can’t give you the total figure. After the pilot scheme in Kebbi, we are now planning to go to the 13 states of the federation and we have a target number of about 300,000 farmers. If you have 300,000 farmers on an average price of about N180,000 per hectares, you can see the amount we are requesting for. We are requesting for huge funds from the Central Bank of Nigeria so that we can support the small scale farmers. We also plan to request for some money from the Central Bank of Nigeria to support large scale farmers. Simply, we are working with different states to identify the target number of farmers in each of the states. And on the basis of this agreement with the Central Bank of Nigeria, we will request for funding. We have been assured by the CBN that once we present the list of farmers with BVN, we’ll be supported with the requisite sum of money.
Is the programme only meant for dry season farming?
No, it is not. Now, we have started with dry season, we’re going into the wet season. For the wet season, in the next couple of weeks, we are targeting 300,000 farmers. After the wet season, we are planning for the dry season. So, it is going to be for both wet and dry seasons.
NNPC Demands Additional N2.5 Trillion For Fuel Subsidy in 2022
The Nigerian National Petroleum Company (NNPC) has stated that due to the increase in the price of crude oil in the global market, an additional N2.5 trillion is needed to cater for fuel subsidy.
This is as it demanded a total of N3 trillion from the federal government to fund fuel subsidy this year.
Investors King recalls that the federal government, on Monday cleared the air on the petrol subsidy removal, declaring its suspension after unions’ strike threat.
The Minister of Finance and National Planning, Zainab Ahmed, disclosed that only N443 billion was marked out for fuel subsidy in the 2022 budget to cover January to June, pointing that a total of N3 trillion would now be needed to continue the subsidy payment.
Ahmed made this known on Wednesday, while briefing newsmen after the weekly Federal Executive Council (FEC) meeting in Abuja.
She said, “We presented to the Council today a request for Council’s consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 budget.
“Having taken into account the current realities, increased hardship in the population, heightened inflation, and also that the measures that needed to be taken to enable a smoother exit from the fuel subsidy are not yet in place, it was agreed by Council that it is desirable to exit fuel subsidy.”
The minister explained that the additional money became necessary due to the increase in crude oil price at the global market adding that the country consumes 65.7 million litres a day.
“We have to make an incremental provision of N2.557 trillion to be able to meet the subsidy requirement, which is averaging about N270 billion per month.
“In 2021, the actual under-recovery that has been charged to the federation was N1.2 trillion, but in 2022, because of increased crude oil price per barrel in the global market, now at $80 per barrel and also because an NNPC’s assessment is that the country is consuming 65.7 million litres per day, now we’ll end up with the incremental cost of N3 trillion in 2022,” she said.
Ahmed hinted that the council agreed with the stance of the state governors, that there was a need to bring down the amount– N3 trillion.
“We want to be able to settle some of the subsidy costs through this reconciliation process. So, when we’re done with that, whatever is left that we’re not able to apply to what an NNPC is owing the Federation will not be increasing the deficit. And that means increased domestic borrowing.”
CBN Holds Monetary Policy Rate At 11.5%, Leaves Other Parameters Constant
In its continuous efforts to boost the country’s economy and as well, reduce inflation, the Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) has retained the Monetary Policy Rate (MPR) at 11.5% with all other parameters unchanged.
Governor of the CBN, Godwin Emefiele, disclosed this while reading the communique of the first monetary policy committee meeting of the year on Tuesday.
The committee unanimously voted to retain the Cash Reserve Ratio at 27.5% and the liquidity ratio at 30 percent.
According to the MPC, the Nigerian economy is expected to continue its positive trajectory following the impressive growth recorded in the third quarter of 2021.
Monetary policy refers to any policy measure devised by the Central Bank to control the cost, availability and supply of credit.
According to the apex bank, the ultimate goals of monetary policy are basically to control inflation, maintain a healthy balance of payment position in order to safeguard the external value of national currency and promote adequate and sustainable level of economic growth and development. These goals are achieved by controlling money supply in order to enhance price stability (low and stable inflation) and economic growth.
Investors King reports that CBN undertakes monetary policy in order to maintain Nigeria’s external reserves to safeguard the international value of the legal currency, promote and maintain monetary stability and a sound and efficient financial system in Nigeria, act as banker and financial adviser to the Federal Government and act as lender of last resort to banks.
The legal backing for monetary policy by the Bank derives from the various statutes of the bank such as the Central Bank of Nigeria Act of 1958 as amended in CBN Decree No. 24 of 1991, CBN Decree 1993 (Amendment), CBN Decree No. 3 of 1997 (Amendment), CBN Decree No. 4 of 1997 (Amendment), CBN Decree No. 37 of 1998 (Amendment), CBN Decree No. 38 of 1998 (Amendment), CBN Decree 1999 (Amendment) and CBN Act of 2007 (Ammended).
COVID-19: IMF Rolls Out $50 Billion Trust Fund, Targets Low-income, Vulnerable Countries
The COVID-19 pandemic, no doubt, has had significant economic consequences, especially on low-income and less developed countries.
It is in view of this that the International Monetary Fund (IMF) proposed a $50 billion trust fund to help these low-income and vulnerable middle-income countries build resilience and ensure a sustainable recovery through a Resilience and Sustainability Trust (RST), Investors King has learnt.
The RST’s central objective is to provide affordable long-term financing to support countries as they tackle structural challenges.
According to the IMF, broad support from the membership and international partners will further aid in the approval of the RST by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the end of the year.
Apart from the pandemic, climate change is another long-term challenge that threatens macroeconomic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.
Hence, the RST support aims to address macro-critical longer-term structural challenges that entail significant macroeconomic risks to member countries’ resilience and sustainability, including climate change, pandemic preparedness, and digitalization.
The IMF and World Bank staff have worked closely to develop a coordination framework on RST operations on climate risks, building on earlier experience in supporting countries with structural reforms. Similar frameworks with relevant institutions are expected to be developed in the coming months in this and other reform areas.
Meanwhile, to qualify for the RST support, an eligible member would need a package of high-quality policy measures consistent with the RST’s purpose; a concurrent financing or non-financing IMF-supported program with appropriate macroeconomic policies to mitigate risks for borrowers and creditors; and sustainable debt and adequate capacity to repay the Fund.
The RST would be established under the IMF’s power to administer contributor resources, which allows for more flexible terms, notably on maturities, than the terms that apply to the IMF’s general resources.
Consistent with the longer-term nature of balance of payments risks the RST seeks to address, its loans would have much longer maturities than traditional IMF financing.
Specifically, 20-year maturity and a 10-year grace period has been proposed.
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