The Anchor Borrowers' Programme of Boosting Agricultural Production

The Anchor Borrowers' Programme of Boosting Agricultural Production

DOI: 10.4018/978-1-5225-3059-6.ch006

Abstract

On November 17, 2015, the government of Nigeria launched the Anchor Borrowers' Programme. The programme is aimed at boosting agricultural production and non-oil exports in the face of dwindling crude oil prices. Because the Anchor Borrowers' Programme is relatively recent and relevant to the main theme of the book—financing agricultural production expansion—its vision and mission are highlighted in this chapter with a view to informing and influencing the expected beneficiaries. The methodology employed is a systematic and analytic review of relevant literature. It is concluded that the Anchor Borrowers' Programme is a well-articulated initiative for economic linkage between smallholder farmers and reputable large-scale agro-processors with a view to increasing agricultural output and significantly improving capacity utilization of processors. It is recommended that the government resist the temptation of policies and programmes that are aimed at boosting agricultural financing and production rising and falling with the government that initiated them.
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Background

On November 17, 2015, the government of Nigeria launched the Anchor Borrowers’

Programme (ABP). The Programme is borne out of the consultations with such relevant stakeholders as the Federal Ministry of Agriculture & Rural Development (FMARD), State Governors, agro-millers, and smallholder farmers. The consultations were based on the need to boost agricultural production and non-oil exports in the face of dwindling crude oil prices and the negative effect on the revenue profile of Nigeria. According to Emefiele (2016), Nigeria’s food import bills were exceptionally high; rice and wheat formed part of the items that consumed a whopping N1.0 trillion in foreign exchange. Emefiele (2016), further stated that food importation fueled domestic inflation, depleted our foreign reserves, displaced local production and created unemployment and concluded that import dependency especially on commodities of comparative advantage was neither acceptable nor sustainable.

In line with its developmental function, the Central Bank of Nigeria (CBN) established the ABP and is designed to create a linkage between anchor companies involved in the processing of agricultural commodities and the small holder farmers of the relevant key agricultural commodities. The ABP is aimed at the provision of farm inputs in kind and in cash to small holder farmers for the purpose of boosting production of the relevant commodities, stabilize supply of agricultural produce as inputs to agro processors and, as a result, address the country’s negative balance of payments on food. The arrangement is such that at harvest, the small holder farmers supply their produce to the Agro-processor- the Anchor -who pays the cash equivalent to the farmer’s account.

According to Central Bank of Nigeria (2016), the broad objective of the Anchor Borrowers’ Programme is to create economic linkage between smallholder farmers and reputable large-scale agro-processors with a view to increasing agricultural output and significantly improving capacity utilization of processors.

Specifically, other objectives include:

  • 1.

    Increase banks’ financing to the agricultural sector;

  • 2.

    Reduce agricultural commodity importation and conserve external reserves;

  • 3.

    Increase capacity utilization of agricultural firms;

  • 4.

    Create new generation of farmers/entrepreneurs and employment;

  • 5.

    Deepen the cashless policy and financial inclusion;

  • 6.

    Reduce the level of poverty among smallholder farmers; and

  • 7.

    Assist rural smallholder farmers to grow from subsistence to commercial production levels.

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Loan Beneficiaries And The Relevant Enterprises

For ease of administration, the loan beneficiaries are required to be in groups/cooperatives of not less than five and not more than twenty. Loan is targeted at smallholder farmers engaged in the production of the identified commodities. The loans are obtainable through eligible Participating Financial Institutions (PTIs). The PFIs are Deposit Money Banks (DMBs), Development Finance Institutions (DFIs), and Microfinance Banks (MFBs).

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