Financing Agriculture in Nigeria.

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Agricultural financing is key to Green Revolution -Dr Innocent Okuku.

Like every business, agriculture requires serious financing. What are the current needs of stakeholders in the sector?
Agricultural financing in Nigeria is still very way behind where it should be. The information the last time I checked is that lending from our commercial banks to agriculture is around 3 to 4 percent of their lending portfolio. For a sector that engages more than 60 percent of the population, provides employment for millions, for that level of lending to go to agriculture, it means there is a disconnect somewhere. Agric financing is a big issue in this country and the financial need for agriculture cuts across the entire value chain beginning from even production.

From production side, there has to be more finance for farmers to be able to adopt and use good farm inputs and equipment on their farms; there is need for people to acquire land for farming so that if you go to a location which is not your place of origin, and you want to farm, access to land is a big issue except you can afford to buy. So you need finance for those kinds of things. And then when you start to talk about the cultivation itself, there is a lot of financial needs along those lines and even where the produce gets harvested, value addition is another area  where financing is very crucial.

Report has it that in Nigeria we lose about 40% of agricultural produce to spoilage and postharvest. So we need to have a structure where people can be financed to acquire small equipment that farmers can use to create the first layers of value addition even if it is not taken to finished goods. Finance is required even in the marketing of the agriculture produce. If you compare things that are imported into Nigeria with those that are produced in the country, what comes out is that their products are better branded. All about of branding and core marketing work require financing. So if you look at the entire value chain, there is huge need for agricultural financing.

 Are the financial institutions ready to finance agriculture in Nigeria?
I will say no. I don’t think that the financial institutions in Nigeria are sufficiently committed to financing agriculture. I will tell you the reasons: one major reason why financial institutions are not so committed to financing agriculture in Nigeria is the fact that there are a lot more attractive alternatives to agriculture for them to put their money into – oil and gas and property development. They lend to that sector at high interest rates where there is “assurance” in quote that their money is coming back.
Two, there is a limited understanding of agribusiness among our financial institutions. The operators of financial institutions don’t understand how agriculture works. Therefore they judge agriculture as being too risky to finance.

Sometimes the issues is not really the difficulty in finding the finance, it is the lack of conviction by many farmers that this finance, if I find it at all cost, will I get value for it.

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