The International Monetary Fund (IMF) has disclosed that 76 per cent of loans given out to farmers by the federal government, under the Anchor Borrowers Programme (ABP) of the Central Bank of Nigeria (CBN) have not been repaid.
The international organisation made this known in its latest country report titled ‘Nigeria: Selected Issues, ’ which it said is based on the information available at the time it was completed on January 12, 2023.
The IMF said agricultural credit in the country has not significantly succeeded in increasing production due to the difficulty in targeting the correct recipients.
It pointed out that although the CBN allows farmers to pay in cash or give the central bank their produce of same value under the ABP, repayments had been very low.
“For the Anchor Borrowing Program, repayment is also low at 24 percent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.
“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases (e.g., new agricultural input trading companies to elicit trading rents),” the IMF report read.
It also said recent data (November 2020) from the central bank showed that the repayment rate for the commercial agriculture credit (CAC) scheme was at almost 66 percent.
It, further said that since the loans started in 2009, the 66 per cent repayment rate was not a particularly high outcome.
The IMF said its cross-country analysis identified four levers for raising food security levels: raising per capita consumption, raising production yields, limiting food price inflation, and reducing reliance on food imports.
It said per capita consumption was far below comparator countries in Nigeria, and it could be stimulated through increased diversification.
IMF further observed that yields were also lower in Nigeria than in other countries due to scarcity of inputs (fertilizers, modern irrigation methods, and mechanisation).
The international organisation, therefore, urged Nigeria to address challenges hindering access to timely, high quality, and price competitive inputs, saying that this would not only achieve optimal productivity of agricultural outcomes but also temper food inflation.
The ABP was launched by President Muhammadu Buhari on November 17, 2015.
Last year, the CBN said the ABPincreased rice milling plants from 6 to 50 in the last six years.
