‘How we established the first farmers’ bank in Nigeria’

Can you tell us in brief the activities of your agency in this state?This project was designed to address the poverty level of rural farmers and to increase their income by lifting them from subsistence level to where they can use their resources to develop the farmlands that are available to them. This project is […]

Can you tell us in brief the activities of your agency in this state?
This project was designed to address the poverty level of rural farmers and to increase their income by lifting them from subsistence level to where they can use their resources to develop the farmlands that are available to them. This project is funded by the World Bank, the state government, the local governments and the benefiting farmers and other stakeholders.
The programme started about five years ago with $4.6 million. This money was meant to assist farmers who have activities in agriculture that include crop production and livestock processing.
How were you able to form these farmers into groups?
Now, the farmers came together and formed groups that we call ‘Fadama User Groups (FUG)’ comprising 10 to 15 people per group. Now, 10 of the FUGs will now give what we call ‘Fadama Community Association (FCA)’ which now becomes the apex body. We work with these farmers based on their needs which we call ‘demand driven.’ Unlike the foreign government that will decide what to give farmers, not knowing what they need. Under this programme, the state talks to the farmers to know what they want and what can be given to them. We are always planning along with them to know what they really want us to do for them, what are their immediate needs and how do we come in? Based on that, in Plateau we were able to work with these farmers with over 89 FCAs in the state.
We understand that Fadama farmers in this state are making arrangement to establish a farmers’ bank, how far have they gone on that?
Like I said earlier, we give farmers assistance in terms of grants to develop their enterprise, now each group is being funded. We give them money for whatever activity they want to go in for and they are supposed to save 5 to 10 percent of the interest they generate from the enterprise. They now open a bank account that we call ‘Fadama User Equity Trust Fund (FUETF). Now, the saving is supposed to be used as a revolving loan to assist the farmers especially when the project comes to an end. So, every FUG opened a bank account. This bank account is meant to help them sustain their enterprise. Subsequently, these groups continue to save money that they always fall back to.
They use the money as a revolving fund where they borrow from to do business and refund back just like what Hausa people call ‘adashe’. Now from there, each FCA and FUG at each local government area saved different sums of money depending on the enterprise they are into. Based on that, we had consultation with the Central Bank of Nigeria (CBN) and discussed with them on the way forward, on how to sustain the tempo because soon, the project will come to an end. After discussing with the CBN and the farmers themselves, we resolved to establish what we call ‘Fadama Farmers Micro Finance Bank.’ The farmers also agreed and we asked the CBN how to go about it? They advised us to have a one unit micro finance bank which will be sited in Jos, the state capital. For one unit micro finance bank, we only need to deposit N20 million. They also gave us the option of having a micro finance bank with branches but that attracts higher deposit. The farmers opted for the single unit bank with only N20 million deposits to start with. The farmers met and paid the N20 million deposit to the CBN from their bulk accounts.
As at December, 2014 Fadama farmers in Plateau State had over N55 million in their accounts. After paying the deposits, we then engaged a consultant to prepare grounds for the take off of the bank. As at today, the Corporate Affairs Commission (CAC), has approved the name of the bank. The CBN has also processed our papers and given us clearance to go and commence the establishment of the bank. We are now at the stage of looking for accommodation for the bank and then employing staff that will work in the bank. We hope to formally launch the bank in March as the first and only farmers own bank in Nigeria.
How do you intend to make this bank different and friendlier to farmers than other banks in the country?
Our thinking is to see how we can assist the ordinary farmer, ordinary trader trading on agricultural produce. For example, you see a lot of women selling tomatoes, cabbage, lettuce, rice, maize or akara that require only N50,000 to enhance the business. But because she has no collateral to seek for bank loan and even where she gets the loan the interest rate is too high and unbearable, the farmers bank can take care of her. Such people can go to this bank without any collateral and request for such loan to develop their businesses.
We are also insisting on having only one digit interest rate in respect of all loans. We hope to address a lot of poverty issues among the poor in the state. A small farmer does not need much money to grow. We shall support farmers through the bank to develop their farms and enhance their production. By the grace of God, this arrangement will help us address the difficulties farmers now face in accessing finance for their businesses.
Beyond the issue of access to finance, Nigerian farmers also have problems of developing value chain around their crops to include processing, packaging and marketing. Are you setting the bank in a way that it can link the farmers to local and foreign buyers of their products?
In fact, our experience from Fadama 1 to Fadama 2 and now Fadama 3 has proved to us that the inability of farmers to extend from farming to processing, packaging and marketing is largely responsible for the subsistence in agriculture and we must address that! In most cases they produce but with nowhere to process or market. You also discover that some people that wait behind the scene with their money for the farmer to harvest and they buy the crops and go and process make more gains than the farmer. When Fadama 2 came, it made attempt to address that problem.
When Fadama 3 came as a combination of Fadama 1 & 2, we saw the need to make sure that there are buyers who will buy these things from the farmers as up takers. In an attempt to ensure that, we linked these farmers to some big hotels in Nigeria where they can sell their vegetables like tomatoes, cabbage and so on. We linked most of them to hotels in Abuja, Lagos and Port Harcourt. We have some companies around here that buy maize and soybeans. Our farmers are linked to them and they serve as their out growers. They go there and buy from their farm gates. At a point we were discussing with NASCO to buy rice from our farmers. Presently, under Fadama 3 project, we were given the mandate to grow tomatoes on the Plateau.
Fadama 3 ended in 2013. So, from 2014 some states including Plateau were chosen and each of the states was given a particular crop to grow; Plateau was given tomatoes. Presently, we are working with Dangote in Kano to be buying tomatoes from our farmers. There is another up taker in Kaduna that we are making contact with. We also have an Indian company that is about to commence operation that we are also talking to. Dangote and the other company in Kaduna have met with our farmers and agreed on prices. Agreement on the quantity the farmers are likely to produce, the price and mode of payment have all been reached. These arrangements will give our farmers good money for their products unlike in the past when they will be having wastages as a result of glut. When the bank commences operation, we are sure they will build on this.
The farmers are starting the bank with N20 million capital, are they likely to increase that as time goes on?
Yes, we held a meeting with the farmers about a month ago. At that meeting, the farmers were educated on the need to keep investing in the bank, the need for additional resources to rent the bank building, employ and maintain staff, buy vehicles and so on. They calculated and realized that they require about N10 million to do all that. They are ready for all that. They have started courting some well to do members of their groups to come and invest more in the bank. Most importantly, the meeting agreed not to allow anybody outside the Fadama farmers to come and buy the whole shares and change the perspective of the bank. So, we are very conscious of bringing people from outside to come and invest and make it a profitable venture rather than helping peasant farmers to grow. We have agreed with the farmers on that and they are making a lot of contributions again by bringing in new funds from their personal savings.
We have also agreed that the local government branch of the farmers union with the highest investment in the bank is the one to produce chairman of the board of directors of the bank. They are competing among themselves now. Let me tell you something that gave me great joy. When the farmers from Wase local government could not be able to raise enough funds, the council gave them money to come and invest. The chairman sourced for money and gave the farmers. That was how they were able to reach N4 million. I went and commended him on that for changing the lives of the poor farmers for better.
As a long term plan, are you hoping one day to guide these farmers and the bank to setup an industry for the processing of the common crops they are producing in the state?
In fact, that is the dream that we have as our next line of action. We have started discussing that with them, that look, all this issue of going to Kaduna and Kano to look for up-taker is not the solution. We should think of setting up our industry to process and add value to our products. That way, the farmers will even make more profit than when they rely on selling their raw farm produce. If the farmers can set up an industry, they can generate employment for their children and others in the industry.
When the bank starts full operation, the federated body will now sit down and look at the possibility of establishing an industry that can now serve as an up-taker to add value to what they are doing here on the Plateau. Presently, we have gotten another group of farmers in the southern zone that raised money and bought a big rice milling machine with de-stoner. They are using that to produce good quality rice and are raising more funds for themselves. It is owned by the farmers.