Rethinking the Prospects of Sustainable Finance and Challenges of Agribusiness Transformation in Nigeria: Implications of the Nexus for Entrepreneurship Development

Introduction

Insights from decades-old literature revealed that agricultural financing for the purchase of seed, fertilizers, machinery and other farming needs has been a raging issue (Ihimodu, 1983). The old literature also explicated that private sector financing for agriculture is very minimal because agricultural financing does not give attractive returns compared to other sectors of the economy (Ihimodu, 1983), hence the bulk of the financing for agriculture has come from the government, which is grossly inadequate because the demand for agricultural financing outweighs the supply (Olomola, 1991; Adegbite et al., 2008). Amazingly, the situation in the agricultural sector has not really changed, as the challenge of financing persists. According to Lawal & Abdullahi (2011), the challenge of agricultural financing has not abated as a large percentage of the rural farmers do not have access to financial resources because of the stringent conditions imposed by the formal financial and credit institutions. To survive, however, the farmers resort to financing from three informal financing schemes namely: (i) periodic savings; (ii) money lending; and (iii) rotating savings.

After the official launching of the sustainable development goals (SDGs) by the United Nations, a renewed determination to transform agribusiness was initiated by the policymakers in Africa (Nigeria inclusive) because one of the thematic issues that the SDGs intend to address is food sustainability through an inclusive agricultural strategy (Babu, Mavrotas & Prasai, 2018; Panel, 2018; Ali, Agyekum & Adadi, 2021). To actualise the targets of SDGs, there is a need to rethink agribusiness transformation in Nigeria through sustainable finance (SF, henceforth) because both development-oriented nuances have the capacity to boost food production, increase the GDPs, and could directly strengthen the actualization of SDG 1, SDG 2, SDG 3, SDG 8, SDG 9, SDG 10, SDG 11, SDG 12, SDG 14, SDG 15, SDG 17, and indirectly impact other SDGs (Dhahri & Omri, 2020; Raimi, Che & Mutiu, 2021). Nigeria is the context of focus in the chapter because of its strategic status in the Sub-Saharan Africa. Nigeria’s agribusiness flourished for several decades, but successive leaders neglected the agricultural sector, and oil became the most viable resource that drives economic development (Matemilola, 2017).

To transform agribusiness in Nigeria, the sector requires sustainable financing. Agribusiness transformation is believed to have the capacity to increase the earnings of the poor and boosts the productive capacity of farmers in three stages as explained in the literature. In the first stage, agricultural transformation triggers realignment in the labour market by pushing surplus labour out of the agriculture sector, thereby increasing farmers’ real wages. In the second stage, surplus pushed out from the agriculture sector are absorbed or pulled into other sectors that use agricultural products as inputs such as manufacturing, retailing and services. In the third stage, agricultural transformation increases the supply of affordable food in the economy and create a win-win situation for all (Alvarez-Cuadrado and Poschke, 2011; Otchia, 2014]).