The Anchor Borrowers’ Programme: Time for a Rethink? – In recent times, the Central Bank of Nigeria (CBN) made headlines for its ambitious agricultural financing initiative, the Anchor Borrowers’ Programme (ABP). Launched by President Muhammadu Buhari on November 17, 2015, the ABP aimed to establish a direct connection between large-scale anchor companies involved in processing and the smallholder farmers producing vital agricultural commodities.
The Numbers Behind the Programme
From a financial perspective, the CBN’s commitment to the ABP was significant. The bank reported that it had disbursed a total of N1.1 trillion under the programme. However, only N546 billion has been repaid to date. This massive disparity in funds raised eyebrows and sparked discussions about the efficacy and management of the initiative.
Calls for Transparency and Proper Implementation
Farmers, the primary beneficiaries of the initiative, have emphasized the importance of transparency in such intervention programs. They argue that for the desired impact to be realized, these schemes should be transparently managed, correctly executed, and institutionalized within bodies best suited for the job, such as the Bank of Agriculture.
Kaliba Bilala, founder of Tanabit and ex-manager at the Asset Management Corporation of Nigeria, raised concerns over the implementation of the ABP. He highlighted the absence of critical stakeholders, such as the All Farmers Association of Nigeria (AFAN) and the Federal Ministry of Agriculture and Food Security (FMAFS), in the programme’s formulation and execution.
Bilala suggested that the new CBN governor should re-institutionalize the programme, incorporating key stakeholders like FMAFS and AFAN. He argued for the need for proper evaluation and justification of target crops before large-scale production begins.
Is Agricultural Financing Within CBN’s Purview?
Jude Obi, president of the Association of Organic Agriculture Practitioners of Nigeria, questioned the central bank’s involvement in sector-specific loans. He stated, “It is not the job of the central bank to direct loans to specific sectors. This is an aberration and a misunderstanding of central banking.”
The CBN’s role in the ABP, as outlined on its website, primarily revolved around validating the list of participating farmers, ratifying production economics, and monitoring the project for compliance. The bank collaborated with the Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL), deploying a ‘NIRSAL Guarantee Model’ aimed at reducing the risks for participating financial institutions.
However, recent events have cast a shadow on this collaboration. President Bola Tinubu appointed Jim Obazee as a special investigator to delve deeper into the activities of the CBN and NIRSAL, intensifying the administration’s anti-corruption stance.
The Anchor Borrowers’ Programme, though well-intentioned, is currently mired in controversy and operational challenges. For it to truly benefit the farmers and the nation, there’s a pressing need for transparency, the involvement of sector-specific stakeholders, and a reconsideration of the CBN’s role in agricultural financing.