By Mustapha Sumaila
Over the years, government after government in Nigeria have been criticised over inadequate financing of agribusiness due to lack of access to credit facilities by would-be farmers.
This is because the available loanable funds were limited as only a few farmers could access sufficient loans to expand their farming businesses to maximum capacity.
Therefore, the present administration’s focus on agriculture is to gurantee the country’s desire for food security and halt food importation with a view to improve the economy.
President Muhammadu Buhari has always emphasised this commitment and interest to develop agriculture in order to boost the economy, hence his saying that “we must produce what we eat and eat what we produce”.
Matching his words with action, President Buhari on June 24, assented to Agricultural Credit Guarantee Scheme Fund (ACGSF) Amendment Act which has increased the share capital of the fund from N3 billion to N50 billion.
The Fund, being managed by CBN for the day-to-day operations of the scheme, guarantees credit facilities extended to farmers by banks up to 75 per cent of the amount in default net of any security realised.
It will be recalled that the ACGSF was established by Decree No. 20 of 1977, and started operations in April, 1978. Its original share capital and paid-up capital were N100 million and N85.6 million, respectively.
The Federal Government holds 60 per cent and the Central Bank of Nigeria (CBN) 40 per cent of the shares, then the capital base of the Scheme was increased to three billion naira in March, 2001.
Between 1978 and 1989 when the government stipulated lending quotas for banks under the Scheme, there was consistent increase in the lending portfolios of banks to agriculture, but after the deregulation of the financial system, banks started shying away by reducing their loans to the sector due to the perceived risk.
In order to reverse the declining trend, several innovations and products were introduced under the Scheme such as the Self-Help Group Linkage Banking,Trust Fund Model and Interest Draw Back, among others.
The maximum for non-collaterised loan under the ACGSF Amendment Act 2019 is now N100,000. Under the amended Act, the maximum amount for collaterized loan granted to individuals, cooperative societies and corporate entities is now N50 million, up from N10 million.
The amended act also allows Complete Agricultural Value Chain financing to be under ACGSF as well includes the financing of production farm machinery, the implementation and equipment for production, processing, storage and transportation.
Reacting on this development, Mr Promise Amahah, an agribusiness expert, said the ACGSF Amendment Act 2019 showed that the government was becoming more responsive and sensitive to critical issues, especially in the agricultural sector.
He explained that the most striking attraction for him was the deliberate expansion of the scheme to include financing of production farm machinery, the implementation and equipment for production, processing, storage and transportation.
Amahah, who is also the President of Nigerian Young Farmers Network (NYFN), said this move was a significant milestone in accelerating agricultural development in the country.
“It is so thoughtful of government to strengthen other value chains that has instant potential to enhance local production.
“Increase in the share capital will greatly augment the agricultural budgetary shortfall which is grossly inadequate to improve agriculture and create the much needed succor in the sector.
“This rapid and positive improvement will definitely create more jobs, stimulate revenue generation, advance import substitution and mitigate capital flight.
“The results in the immediate short term should call for even further scaling up of share capital and consider including value added services within the value chain.
“Quite frankly, this move heralds a new dawn and is a huge motivation for our upcoming programme to mobilise more young people into Agribusiness,” he stated.
Alhaji Adamu Musa, a large scale farmer in the Federal Capital Territory, also lauded President Muhammadu Buhari for assenting to the amendment act.
Musa stated that this development was a booster for him to expand his farming activities since he is now sure of more fund through ACGSF.
He said the importance of finance to agricultural development could not be overemphasised, adding that the agricultural sector is an important engine of national economic growth.
Mr Cyril Sunday, an economist, also commended President Buhari on his assent to ACGF act which he described as the right step in the right direction.
Sunday said if any government wanted to record any meaningful development in agriculture, such step or amendment was necessary to effect changes to suit current reality.