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FG policies attract N800bn to Nigeria’s agric sector

By BusinessNews Staff on March 10, 2015

Fovourable policies by the federal government have attracted private-sector investment to the tune of N800 billion to Nigeria’s budding agricultural sector since 2012, THISDAY findings have revealed.

The Investments, investigations revealed, were mostly in areas such as rice, sugar and palm oil segments.

However, private-sector credit to agriculture has dipped below 2 per cent of the total despite that the sector contributes about 20 per cent of gross domestic products (GDP).

Analysts at FBN Capital have expressed the belief that federal government’s effort has helped to restore investors’ confidence in the sector.

Highlighting funding developments in the agriculture sector, the analysts stated that agricultural sector has been the beneficiary of the FGN’s successful reforms.

According to the analysts, “Funding vehicles driven by the Central Bank of Nigeria (CBN) like the Agricultural Credit Guarantee Scheme Fund (ACGSF) and the Commercial Agriculture Credit Scheme (CACS) have addressed the limited risk appetite of the deposit money banks (DMBs). There have been benefits in terms of private-sector participation, employment and food security, with an emphasis on the agric value chain.

“In 2014 the FGN allocated N66.5 billion of its budget to the agriculture and rural development ministry. This falls far short of the 10 per cent share (of total spending) called for by stakeholder groups (along with single-digit interest rates) at an industry conference in Lagos in late December.

“The value of loans granted under the ACGSF in H1 2014 was N5.9 billion ($29.6 million), an increase of 65 per cent on the value recorded in the corresponding period of the previous year. Projects in food crops and livestock accounted for 68 per cent and 10 per cent of the total respectively.”

They added: “Meanwhile, N8.2bn was released under the CACS to eight banks for on-lending to privately sponsored projects in the same period. Production and processing accounted for 55 per cent and 36 per cent respectively. We should add that this is the tail-end of the scheme. However, the above mentioned schemes of the CBN and the efforts of the FGN have pushed the share up to a still modest estimated 4 per cent in 2014.”

Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, recently announced that Nigeria’s development partners had committed about $2 billion into Nigeria’s agricultural transformation agenda.

Adesina disclosed this in Abuja during the inaugural meeting of the Nigeria Agribusiness Group (NAG).

He said global financial institutions have endorsed the establishment of staple crop processing zones in the country, which, according to him, would attract private sector investment in the industry.

According to Adesina, the development partners rallied around Nigeria’s agric transformation efforts with commitments totalling $2 billion, which include the World Bank with $1 billion, the African Development Bank (ADB) with $500 million, USAID with $100 million, the International Fund for Agricultural Development (IFAD) with $100 million, and funds from DfID, UNDP and the Bill and Melinda Gates Foundation.

[ThisDay]

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