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Bridging agric financing gap to deepen food security

Nigeria’s agricultural sector over the years has experienced myriads of challenges ranging from sub-optimal yields, poor funding, post-harvest losses, fluctuating commodity prices and poor adaptation to changing climate systems, among others.

The Central Bank of Nigeria (CBN) and commercial banks to bridge agricultural value chain financing gaps, increase yields of smallholder farmers and achieve food security for the population.

The Nigeria’s agricultural sector has so much to contribute to the people’s well-being and prosperity. Reason being that a country that produces its own food has solved more than half of its problems be it economic, health or even political.

That explains why many institutions, agencies of government and private sector operators are taking steps to ensure that Nigeria becomes more productive in the agricultural sector to achieve food security.

Besides, increased focus on the agricultural sector helps in job creation and supports the objectives of the Economic Recovery and Growth Plan (ERGP), boosting Gross Domestic Product  and foreign exchange earnings.

Analysts said that with world population is projected to increase to 9.5 billion by the year 2050, there is critical need to rev up food production and enhance value addition across the value chain segment of key agricultural sector and Nigeria cannot be left behind.

Embracing agriculture ensures that  needs of more than 70 per cent of rural households who depend on agriculture as their principal means of livelihood.

Still, there are problems at different stages of the value chain including getting the right inputs and varieties, inadequate funding, slow adoption of mechanisation, and a high reliance on subsistence production techniques including the adverse effect of the Covid-19 pandemic.

To address these problems and boost food sufficiency,  Nigerian financial institutions are investing in the agricultural sector. Heritage Bank is one of the banks that has taken pride in the past nine years for its operations to bridge the agriculture value chain financing gaps.

The bank is celebrating nine years of entrenching   seamless service delivery in the business of banking, it has also remained resilient in hastening the transition of agriculture from traditional, low-productivity models toward a modern, high-productivity agricultural sector.

The bank has also collaborated with with key stakeholders like the Central Bank of Nigeria (CBN) and Federal Government to prioritise the agricultural sector to attract sizable investments that has continued to help drive expansion and achieve competitiveness.

The move has also  boosted financing to key parts of the value chain, particularly small-holder farmers in a bid to modernize their practices and increase outputs.  

For instance, under the various intervention agricultural schemes of the CBN such as Anchor Borrowers Programme (ABP), the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Commercial Agriculture Credit Scheme amongst others, Heritage Bank has made huge success of the schemes by making funding available to both small holder farmers and SMEs (Prime Anchors) in their efforts to increase agricultural output especially rice and wheat production.

Heritage Bank has opened its doors to its teeming customers and is through its products and services,   creating, preserving and transfering wealth across generations in the country.

This line of operation is steadily yielding great results as the nation continues to move its economic base towards the direction of the future, with a robust emphasis on thoughts about diversification of the county’s economic base.

 

Promoting agriculture value chain

 

Heritage Bank has continued to create market linkages between smallholder farmers and Anchors/Processors, creating an ecosystem that drives value chain financing, improve access to credit by the smallholder farmers by developing credit history through the scheme and much more.

Managing Director/CEO of Heritage Bank, Ifie Sekibo affirmed that the institution is committed to promoting development of agriculture and ensuring that all levels of its value chain can be financed profitably.

According to him, the bank’s involvement in the sector dated back to many years ago and it has always been at the forefront of ensuring overall growth and development of commodities products in Nigeria. 

Equally, the CBN Governor, Godwin Emefiele, recently announced the apex bank’s N41 billion intervention in wheat production in Nigeria for commodity associations and anchor companies.

Heritage Bank has continued to work with CBN and other stakeholders such as wheat farmers association of Nigeria, wheat farmers, processors and marketers’ association of Nigeria, Lake Chad Research Institute and other development partners, flour mills of Nigeria and several seed companies and others to support over 100,000 farmers in wheat production. 

Sekibo said Heritage Bank would continue to play a pivotal role in ensuring effective and readily available platform for market linkages among players in the agribusiness value chain, involving Fast Moving Consumer Goods, warehouse operators, collateral managers, processors, farmers’ cooperatives to transact in a seamless way that guarantees quality, quantity, payment and delivery.

 

 

Achieving growth with partnership strategy

According to Sekibo,  teamwork and partnership with various critical stakeholders and institutions remain a major pillar in the bank’s strategy to realise these objectives.

These partnership over the period brought about the support of small holders’ farmers and Anchors in Oyo, Ogun, Niger, Kebbi, in various communities in Kaduna and Zamfara State in food crop cultivation, cash crop/horticulture, and food processing (in rice, maize, palm oil, casava etc) under NIRSAL and Prime Anchor Borrowers Programme (ABP).

Heritage Bank Plc has also partnered with the Nigeria Incentive Based Risk Sharing System for Agricultural Lending to improve the agriculture value chain by increasing financing to the sector. The partnership aims at identifying and securing financing of impactful agribusinesses within all the segments of the agricultural value chain.

The financing was designed to cover segments from primary production of raw materials and sustaining the processing industries to exportation of the produce.

Sekibo said partnership will avail credits at very low interest rates to commercially viable agricultural projects that have been packaged and fully de-risked.

The bank is also widening and deepening the participation of digital generation in agribusiness. For instance, Sekibo was convinced that support of NIRSAL would help the bank develop a digital agribusiness platform that will strengthen distribution of human capital that meet parameters of agribusiness.

NIRSAL, agreed to serve as a catalyst for national agricultural revolution by boosting commercial agricultural productivity, competitiveness, value addition, market access and enhancing food security and will deploy a mechanism of de-risking the agricultural value chain in order to encourage investment by banks and the entire financial sector.

Divisional Head, Agribusiness, Natural Resources & Project Development, Heritage Bank, Olugbenga Awe said that the bank has strategically put in place measures to ensure fidelity to contract agreements and adherence to fair trade in making sure that farmers earned decent profit for their efforts, which is critical to the sustainability of the programmes.

He said, “the bank’s participation in the programme has paid off as we currently have a rich pool of farmers’ data to support grains production. “The registered farmers in our database can easily be identified and trained with the support of extension services to plant any grains as the season demands. This flexibility provides continuous cash flows to the famers and ensures that more farmers are enlisted to join the programme”.

Awe further disclosed, “In our quest to participate in the rice value-chain through the ABP, we supported hundreds of small holder farmers in various communities in Kaduna and Zamfara State.”

“The sector is driving the next set of entrepreneurs and we are committed to the development of the sector using appropriate technology and modern farm practices. We walk the talk in Heritage Bank as demonstrated in our portfolio allocation to agribusiness,” he said. He noted that the large-scale operators are enabled to expand existing capacities and industrialise for local consumption and export.

This scheme, however, informed Heritage Bank partnership with the Oyo State government in a multi-billion naira project to give agriculture a boost in the state.

Under the initiative, the bank is supporting the Oyo State Agricultural Initiative (OYSAI), a programme designed to revive agriculture, boost agro-allied businesses and create a massive empowerment programme for both youths and women across the state through the creation of thousands of jobs in the sector.

This huge and laudable project that is spread across 3,000 hectares of land in 28 of the 33 Local Government Areas of Oyo State, is in three stages: food crop cultivation, cash crop/horticulture, and food processing.

For instance,  N29 million was received from NIRSAL and disbursed to farmers involved in poultry farming in  Oyo State; farmers got N157 million for maize cultivation in Ogun State, among other interventions. 

Heritage Bank Plc signed a N232 million pilot phase of the out-growers agreement with Biase Plantations Limited (BPL), and its joint venture partner, PZ Wilmar Limited to produce best-in-class palm oil, using the ABP model.

CBN’s partnership for wheat expansion 

Heritage Bank in partnership with CBN set up plans in disbursing N41 billion to farmers from 14 states for the expansion of the wheat production project.

As part of bridging the Agric Value chain financing gap, the Bank, however, registered the wheat farmers with the Lagos Commodities and Futures Exchange (LCFE) for successful disbursement, as the farmers are expected to cover about 111, 025 Hectares of land to attain huge milestones in wheat production.

Meanwhile, being the pioneer Bank to finance the first-ever large scale rain-fed wheat production in Nigeria and also a participating financial institution (PFI) under CBN’s Anchor Borrowers’ Programme scheme, Heritage Bank has taken adequate steps to create an enabling environment for sustainable growth in wheat production; thereby partnering with LCFE for all value-chain stakeholders to interact and trade ownership titles to specific quantities of wheat by registering members for their clients on the commodity exchange platform. 

Sekibo stated that the partnership is basically to consummate Wheat Seed Multiplication Project under the CBN’s Brown Revolution Initiative, in order to ensure due diligence on loan administration, monitoring and recovery, which would bring about increase in the domestic production of wheat and close the wide supply gap in the Nigerian agricultural space.

Also, Awe explained that via the strategic partnerships Heritage Bank has achieved vast footprints in agribusiness.

“For example, through our partnership with Triton Aqua Africa Limited and on-lending support from CBN, Heritage Bank has provided N2 billion for aquaculture to reduce our heavy reliance on fish import.

“Nigeria’s current annual demand for fish is estimated at 2.7 million metric tonnes and we currently produce about 800,000 metric tonnes.

“With support from CBN through Commercial Agriculture Credit Scheme CACS, Triton is now producing about 27,000 metric tonnes and their projection is to reach 100,000 metric tonnes in five years.

“From recent forecast, they will meet that projection easily. The bank is also supporting rice farmers under the ABP in Bakolori, Zamfara, Sanga in Kaduna and Soyabeans farmers in Rijana, Kaduna. Heritage Bank also has ongoing projects across the country,” he said.

On Heritage Bank’s involvement in ABP, the Bank provides on-lending funding to aggregated farmers to grow various products that will serve as raw materials to the processors, thereby ensuring market linkages and access to the market as well as reduce importation and conserve Nigeria’s external reserves.

In 2016, the sums of N54,892,728.00 and N248,413,350.00 were sourced from CBN and disbursed as loans to 185 rice farmers and 414 soya bean farmers respectively in Kaduna State.

In 2016, N37, 995,300.00 was disbursed to 259 rice farmers via 11 cooperatives in Zamfara State.

 

No doubt Heritage Bank’s unswerving lending to the agricultural sector has earned it a deluge of accolades.
To its portfolio Heritage Bank Plc, earned the Nigeria’s Most Innovative Banking Service Provider in 2017 that was bestowed at the inaugural Nigeria Sustainable Banking Award convened by the CBN “For Sustainable Transaction of The Year in Agriculture.”

The Nigeria Agriculture Awards (NAA), at its annual event convened by AgroNigeria (The Voice of Nigeria’s Agriculture), to appreciate immense efforts of those who have contributed to the success of the agriculture sector in the country, announced Heritage Bank as the Agric Bank of the Year, among others.

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