WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2011-07-25 Time: 16:00:02 Posted By: News Poster
By Bello Muhammad Zaki
The conference tagged: “NIRSAL: A Financing Mechanism for a Holistic Transformation of the Nigerian Agricultural Landscape,” was organised by the Central Bank of Nigeria (CBN) to unveil the policy concept and was attended by the Vice- President, Namadi Sambo (who represented President Goodluck Jonathan), the CBN Governor, Sanusi Lamido Sanusi, and state governors of Kano, Adamawa, Kebbi and Kaduna.
The conference did not only unveil the NIRSAL concept, but offered an opportunity to discuss and take decisive actions on key policy issues of the nation’s agric sector, which pinpointed two salient issues that have been bedevilling the sector for quite a long time: The sector had failed to make Nigeria self sufficient in food and agricultural raw materials production and that lack of funding, or to say the least, poor funding of the sector, was the root cause of the sector’s failure to kick-start the nation’s industrial development. This article intends to look at the NIRSAL concept as a new agricultural lending policy at the backdrop of the previous and defunct lending schemes operated in the country in the last five decades. It shall also briefly look at the nation’s past agricultural policies and the subsequent reform policies, particularly their associated funding packages, to ascertain if lending that is part component of agricultural funding, was a key problem; and if NIRSAL as a package could this time around, make a difference.
The CBN Governor described NIRSAL as a financial mechanism for the holistic transformation of the nation’s agricultural sector in which the CBN intends to invest an estimated sum of U.S $500 million to tackle both the agricultural value chain and the agricultural financing value chain. The concept was designed to have a double-barrel effect on the nation’s agricultural financing problems: that it shall transform the agricultural value chain so that banks can lend with confidence to the agricultural sector, as well as encourages banks to lend to the sector’s value chain by offering strong incentives and technical assistance. NIRSAL therefore, emphasises lending to the value chain and to both big and small farmers, unlike the previous lending schemes that encouraged banks to lend to farmers without clear strategy to the entire agricultural value chain.
The U.S $500 million earmarked will be spread amongst the five solution components that constitute NIRSAL as a financing mechanism, thus: Risk sharing Facility (RSF), Insurance, Technical Assistance Facility (TAF), Bank Incentive Mechanism (BIM) and Agricultural Bank Rating System (ABRS). U.S $300 million will be invested on risk-sharing facility, as according to the CBN, “this component would address banks’ perception of high-risks in the sector by sharing losses on agricultural loans. Insurance facility to get $30 million and the facility’s primary goal is to expand insurance products for agricultural lending from the current coverage to new products.” Also $60 million of the sum was earmarked for Technical Assistance facility to equip banks to lend sustainably to agriculture, particularly for the small scale farmers to borrow and use loans more effectively, moving from traditional to mechanised farming system, and increase output of better quality agricultural products. While Holistic Bank Rating Mechanism will get $10 million, and Bank Incentives Mechanism was allocated $100 million.
Nigeria, with an estimated population of over 166 million (by next October) occupies a total area of 92.4 million hectares, consisting 91.1 million hectares of land and 1.3 mil hectares of water bodies. It has an agricultural area of 83.6 million hectares comprising arable land (33.8 percent), with land continuously being cultivated (2.9 percent), forest or woods (13.0 percent), pasture (47.9 percent), and irrigable land or fadama (2.4 percent). Its average rainfall ranges from 300mm in the Savannah region of the extreme north to about 2,500mm in the forest region of the coastal areas. With this abundant land, good climate and about 70% of its population living in rural areas and engaged in farming, no crop on earth could not be sufficiently cultivated; but less than half of this cultivatable land is being utilised.
Our output of food per capita is among the least in sub-Saharan Africa (SSA), because of lack of proper input; poor funding, large subsistence players that are not mechanised; absence or little extension services; post harvest loses; poor storage and preservation facilities, and many hindrances. But food and industrial raw materials were sufficiently produced in the colonial era and after, till the early 1970s when the petroleum sector emerged and resulted in significant structural changes in the economy. There was a boom in oil exports by this period during which oil exports rose from below 60% before 1970 to over 90 percent after 1973; non-oil exports declined from about 30 percent in 1970 to less than 10 percent by 1980.
The oil boom generated growth in public expenditures that came along with tremendous economic activities, such as infrastructural development, creation and expansion of institutions and mass importation of different kinds of consumer goods. This further generated rural-urban migration that depopulated farmhands and swell the urban ranks of industry workers, construction labourers and imported commodity distributors and hawkers. The agricultural sector became less attractive; shortages of output were supplemented by the import of the boom era, making the imported commodities much cheaper than the ones grown locally. Also, these imports came with attendant imported inflation, and the boost ended and glut set-in by early 1980s, ensuring fallen oil prices therefore earnings plummeted from U.S $ 24.9 billion in 1980 to U.S $5.2 billion in 1986. The situation resulted into a very serious readjustment of the nation’s economic fundamentals in 1981, called Austerity Measures, and subsequently, a total overhaul of the economy in 1986, called Structural Adjustment Programme (SAP).
The agricultural sector was given priority in the First Development Plan (1962-1968) and as it went on in the successive plans and in most of the intervention programmes that followed, capital for agricultural production and post-harvest activities were mainly provided by the government as budgetary allocations and subsequently from existing lending institutions set up by the government for the purpose.
Concessional and subsidised lending rates for agricultural development were introduced by the government in early 1970s as a monetary policy instrument to provide the needed credit for the farmer. In 1972, the federal government directed commercial and merchant banks to lend a certain percentage of their total loans to the agricultural sector. The policy did not yield much credit to farmers due to high inflation that made it unattractive for the banks to lend to the farmer at a low interest rate prescribed by the government. This went on with varying percentage of the rate from time to time up to 1996 when it was stopped, but suffered distortion by the banks during the SAP era when the financial sector was reformed and subsequently agricultural lending rates were deregulated in 1987.
The Nigerian Agricultural Credit Bank (NACB) was established in 1973 as a supporting financial initiative for National Accelerated Food Production Programme (NAFPP) that was also established in 1973 as a fire-brigade solution to a looming famine situation as a result of the 1973 draught. The NAFPP fizzled out no sooner than the food shortages which followed the draught that warranted setting it. Agricultural Development Projects (ADPs) were established in The Third National Development Plan of 1975-1980 as the first intervention programme and till today, the largest ever taken by the government. The ADPs were started in 1975 as pilot schemes in Gusau, Funtua and Gombe to provide improved agricultural services to farming communities for enhanced rural development. Though ADPs are extension services based, but like Operation Feed the Nation (OFN), another programme launched in 1976 to mobilise Nigerians towards self suffiency in food production, was devoid of a lending scheme.
A rural credit scheme was introduced by the government in 1977 in which all commercial banks were authorised by the CBN to open rural branches and facilitate lending to farmers particularly for OFN and projects under River Basins Development Authorities (RBDAs), established by Decree No. 25 of 1976 to achieve a higher rate of agricultural growth especially for production and regular irrigation water supply. To compliment this effort, Agricultural Credit Guarantee Scheme Fund (ACGSF) was established by Decree No. 20 of 1977. RBD As and the ADPs became the backbone of President Shehu Shagari’s Green Revolution Programme, and were incorporated into the Fourth National Development Plan of 1981 to 1986.
A clear agricultural lending initiative was for the first time established with the launch of the first Agricultural Policy in Nigeria in 1988. The policy emphasized the liberalisation of agricultural loans to small scale farmers, poverty alleviation, integrated rural development and mechanisation. Agricultural and rural development projects were set up under this policy such as the Directorate for Food, Roads and Rural Infrastructure (DFRRI); the National Directorate for Employment (NDE); National Land Development Authority (NALDA), and National Centre for Agricultural Mechanisation (NCAM).
All these policies did not serve their purposes as the food import bills blossomed and Nigeria was named in 2008 as second world largest importer of food after Philippines. For solutions, the government embarked on further reforms in the sector and came up with the National Special Program on Food Security and Presidential Initiative for Selected Agricultural Commodities in 2002. Self sufficiency in the production of commodities such as cassava, rice, vegetable oil, tree crops, livestock, fisheries and aquaculture was targeted by 2005 and the export of their excess was to commence by 2007. These were all not achieved as credit lending to the agric sector was still below 1%, compared to 6% in Kenya and 18% in Brazil
Original Source: 
Original date published: 24 July 2011
Source: http://allafrica.com/stories/201107250902.html?viewall=1