Ogbeh, we want a solution

Minister of Agriculture and Rural Development Chief Audu Ogbeh was reported to have said last week that farmers could not borrow money from banks because of the high interest rate, which he said does not help our agricultural growth. Speaking at a national workshop on developing a rapid action plan for quality seed production and […]

Minister of Agriculture and Rural Development Chief Audu Ogbeh was reported to have said last week that farmers could not borrow money from banks because of the high interest rate, which he said does not help our agricultural growth. Speaking at a national workshop on developing a rapid action plan for quality seed production and presentation of the alliance for seed industry in West Africa, Chief Audu Ogbeh lamented that no farmer can survive the high interest rates demanded by Nigerian banks.
He said, “You can’t borrow in this country to fund agriculture. Yet, they want us to do magic. Most of the banks insist that the lowest they can give is 25 percent interest on their loans and no farmer can survive with that rate.” He also said most banks speak the same language when it comes to funding agriculture in Nigeria. What Chief Ogbeh said is true but Nigerians no longer expect the Minister of Agriculture or any other minister of the Change administration to reduce himself to lamentation and excuses. Millions of Nigerian peasant farmers have known for decades that banks will not do business with them. Even commercial farmers who have the collateral to offer banks still recoil at the high interest rate, farming not being such a lucrative business around here.
Chief Ogbeh is regarded as a foremost authority on agriculture in Nigeria so it is time that he unveils a solution to a decades-old problem, not merely join in the lamentation. He did say at the workshop that government is working hard to address the issue and that it is high time the nation feeds its citizens by reducing food importation. These are very good goals but what Nigerians need to hear at this point is the method of achieving them. Not that there have been no efforts over the years. For example, the Nigeria Agricultural and Cooperative Bank [NACB] was established in 1973 to address the problem of bank loans to farmers. Many other schemes later came up such as Peoples Bank, Community Banks and cooperative societies.
Banks are not charity organisations but hard-nosed businesses that must make returns to their investors. They cannot be expected to give loans to clients when they are not sure of recovering it, and our small farmers look to bankers like a very risky prospect.  Of all the policies evolved over the years to address this problem, potentially the most promising was the late President Umaru Yar’adua’s idea of land reform to enable farmers to use their land as collateral to get loans from banks. It was not certain that the idea would work but then, it was never even tried because it faded away with Yar’adua’s death.
If Chief Ogbeh does not think that idea will work, then he should unroll another one with at least equal potential. Other issues are linked to that, such as training farmers to manage their finances and to disabuse their minds of the notion crated over the years that some loans are not meant to be repaid. Unless the twin problems of sourcing of loans for farmers and improving their management capacity to treat farming as a business are solved, then the current campaign to encourage young Nigerians to return to agriculture may not succeed.
Other interesting ideas have been propounded over the years with respect to the problems of agriculture in Nigeria. One such was that what farmers need more than anything is not loans but guaranteed prices. That once a farmer is sure he will be able to sell his produce at a guaranteed minimum price, he will somehow find the wherewithal to produce. This idea does not completely banish the need for loans to small farmers but it shows the diversity of ideas available to agricultural policy makers. Chief Ogbeh is supposed to be a miracle worker in this matter. He should stop lamenting and reeling out figures and should unveil a solution.