Imperatives To Establish A Bank For The Smallholder And Rural Farmers


By Jim Rex-Lawson Moses

There is no doubt that there is a renewed effort by government to advance the business of food production in Nigeria to alleviate poverty, end starvation, create employment and attain food sufficiency for the nation. Rural Farmers

This, the government has demonstrated genuinely through various intervention funds for agriculture.

The setting up of The Nigeria Incentive-Based Risk Sharing System For Agricultural Lending (NIRSAL), to derisk agric lending through commercial banks is a welcome development. We appreciate plans by the Federal Government to recapitalize the Bank of Agriculture (BOA), to enable it face current challenges in the sector. Also, the role currently being played by the Bank of Industry (BOI), to finance agriculture processing is well appreciated.

But as beautiful as these efforts appear, none of the above organizations is properly designed to address the plight currently faced by smallholder farmers and rural farmers; the major producers of the food we eat in the urban centres.

Imperatives To Establish A Bank For The Smallholder And Rural Farmers
Imperatives To Establish A Bank For The Smallholder And Rural Farmers

The foregoing has become imperative to address because at various times, government has made several intervention funds available to commercial banks for the funding of agricultural businesses. But despite these efforts, accessing a loan from the banks to fund agribusiness has remained a daunting task. While some banks have insisted on prospective customers possessing Certificates of Occupancy for eligibility to access loans with high interest rates, others are simply not offering such loans. And while it is a lot easier to access loans from some micro finance banks mostly based in urban centres, one is left to wonder why this is not obtainable in commercial banks. Even when they claim they are funding agriculture, only a few rich individuals tend to benefit from these funds as the banks will rather prefer lending this funds to importers and other businesses with quicker return on investments. If this is left unchecked, it could finally take the nation backward as efforts of government towards funding agribusinesses will not be felt. Of much concern is the fact that these rural farmers and smallholder farmers do not have Certificates of Occupancy and cannot meet the criteria; this is because even those who posses these certificates have been severally denied loans.

NIRSAL, for instance has launched several agric funds with banks. It recently launched N50billion with Stanbic IBTC plc and most recently, N10billion with Union Bank Plc. An interrogation on how these funds would be accessed still reveals stringent and rigorous criteria that even most urban farmers will not meet.

BOA at the moment is not effective and when fully operational will not target the rural poor. BOI as well does not finance farming but processing, and processing is not done by small holder farmers and rural dwellers; and even when it is done in rural areas, it is the rich farmers who embark on such ventures.

Therefore, the imperatives to establish a specialized bank for the rural poor farmers and small holder farmers cannot be overemphasized if we must give recognition to the important role these set of farmers play in food production, and if the government is genuinely determined to alleviate poverty, fight hunger and starvation, generate employment and attain food sufficiency.

Government should as a matter of urgency set up a bank targeted at these set of farmers. When operational, only rural dwellers should be allowed to open accounts and their highest places of operation should be local government headquarters. In disbursing funds, besides other criteria that may be adopted, community heads or leaders can be used to guarantee such loans as they will be in a better position to speak for their subjects.

We appreciate the current agric funding intervention programmes of the government, but they are lopsided as they only carter for a few privileged and not the entire sector and value-chains; smallholder farmers and rural poor.

We hereby advocate for inclusive financing for rural transformation.

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