President, Lagos Chamber of Commerce and Industry (LCCI), Mr. Babatunde Ruwase, has harped on need to explore alternative funding to close the funding gaps and boost the agricultural value chain in the country.
He made the observation in Lagos at the 2019 LCCI symposium of the financial services group on Financing AgriBusiness with the theme: ”Making AgriBusiness Bankable: Lenders and Investors Expectations.
Earlier, LCCI president, said the focus of the theme is to diversify the country’s productive base especially in the high impact sector like Agriculture adding that there are vast untapped opportunities in agribusiness value chain.
According to him, the World Bank projects that by 2030, the African food market will grow to be a $1trillion industry and Nigeria will need to scale up investments in improving agriculture yields and integrate the value chain over the next decade to effectively capture a significant share of the market.
Ruwase who was represented by Asiwaju Olawale Cole, noted that agricultural financing largely depends on government funding, financial institutions, private investment and institutional funding.
He added that the Anchor Borrowers Programmes, Commercial Agriculture Credit Scheme (CACS) and the establishment of the Nigeria Incentive-Based Risk sharing System for Agricultural Lending, (NIRSAL) as part of the initiatives that have deepened the credit market for Agribusiness.
He said, ”African Development Bank (AfDB), Bill and Melinda Gates Foundation, Food and Agriculture Organisation (FAO), Alliance for Green Revolution in Africa, (AGRA) and the United States for Agency for International Development (USAID) have also supported growth in the agricultural sector for many decades and they have channeled funds towards capacity development.
LCCI boss maintained that agribusiness has not enjoyed robust credit flow from financial institutions in the country and private investors over the years partly because of the perception that projects in the value chain have longer payback period with relatively less profit margin, he added.
He said, from the official data reports, agriculture attracted $169.37 million between April and June 2019 which is mere three percent of total foreign capital brought into Nigeria and during that period, bank credits to agriculture was less than five percent.
Meanwhile, MD/CEO, NIRSAL Plc, Mr. Aliyu Hameed, also stated in his keynote address that agricultural value chain had been broken due to inadequate funding. He said, there is need to unlock private capitals to flow into the agricultural space to finance the sector.
Hammed Aliyu who was represented by Mr. Ernest Ihedigbo noted that agribusiness in Nigeria is a huge investment adding that the sector needs finance capitals to unlock its full potentials to yield Returns on investment to the country.
On his part, he said the agricultural value chain consists of the pre-upstream, upstream, midstream and downstream sector adding that capital, technology and human capital is needed for competent management of agricultural practices in Nigeria which therefore will leverage on the productivity of the sector.
Also commenting, the MD/CEO of Sterling Bank PLC, Abubakar Suleiman, said the financial institutions must provide agricultural funding in Nigeria to make agribusiness more attractive and viable to boost the value chain.
Abubakar, who was represented by chairperson Financial Services Group of the bank, Mrs. Mojisola Bakare, noted that despite the initiatives, credits to the sector remains largely stifled stressing that evidence showed that the total bankable loans to the agric sector was only about four per cent of the total lending of the commercial bank which is below the CBN seven per cent benchmark.
He said, ”these outcomes indicates that there are expectation gaps between the financial industry, owners of funds on one hand and agriculture operators on the other hand and also those who demand for the funds,” he said.