Our rice interventions have created over 1.3m jobs – CBN

Mr. Philip Yila Yussuf is the Director, Development Finance Department, Central Bank of Nigeria. In this interview, he speaks on why the apex bank is vigorously championing the Anchor Borrower Initiative for farmers across the country and why the intervention focuses more on rice value chain. The story of the current rice revolution in the […]

Mr. Philip Yila Yussuf is the Director, Development Finance Department, Central Bank of Nigeria. In this interview, he speaks on why the apex bank is vigorously championing the Anchor Borrower Initiative for farmers across the country and why the intervention focuses more on rice value chain.

The story of the current rice revolution in the country is incomplete without mentioning the contributions and support of the Central Bank of Nigeria (CBN). Why is the CBN involved in the rice sector?

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If you look at Section 31 of the CBN Act, it allows us to carry out development financing and the banks’ involvement in such development finance activities is really aligned with the strategic mandate of ensuring price and exchange rate stability.

So, food prices, unemployment are key indices of the macro economy, and food price inflation, for example, contributes a significant chunk of the basket in tracking total inflation.

So inflating this development through sustainable finance or other such options that will deliver very affordable and accessible credit, will really enhance the banks’ ability to deliver on its primary mandate which I said earlier was ensuring price and exchange rate stability.

And rice is a major staple food in Nigeria, widely being consumed. It consumes a significant part of our import bill, a lot rice importation in the last few years before we started this intervention and it can be really described as the significant import index for food security.

So, the bank’s interest is to really develop local production capacity which would do a couple of things to drive productivity, to boost employment because small holder farmers are going to be involved in this. Ultimately and very important for us, it will conserve foreign exchange requests that we normally have for rice importation.

Most of your interventions have come through the popular Anchor Borrowers’ Programme (ABP) launched in 2015 to checkmate issues of reliance on imported rice and other commodities and save the country billions of naira lost to the food imports annually. What have been the learning curves for the CBN in terms of the ABP adoption within the states?

Obviously, since 2015 there have been many leaning curves but let me talk about ABP. It was established by President Muhammadu Buhari in 2015 with a view to recreating the demand-driven ecosystems that will link small-holder farmers with agro-processors. It is one thing for you to be able to farm, but if you don’t have the processing capacity, those farm outputs will definitely waste.

Really, it is to create and do this linkage through a financing framework that is aimed at relating these investments across agricultural value-chain. Our experience over the years has shown that there are enormous potentials in the agricultural value-chain and development in the value-chain in the last five years. And this has shown that there is immense local capacity that can be optimized. I will give you an example…

Rice mills today have increased significantly. We have over 95 standard processing mills across the country because in deed, there is capacity to be able to produce paddy rice for them to work with. This ABP financing window, has evolved from state window. You remember that in 2015, we started in Kebbi State to bring private sector players, you have something like ‘Prima la Cost’ because you cannot just improve productivity and drive growth in the production of the goods without the involvement of private sector. So, we found out that that was a lesson learnt for us and we brought in private sector to operate under ‘the Private Prima Anchor  and now we are also looking at how we can do a PPP kind of partnership. The state will provide the lands and then get private sector to come in because all lands belong to government and there are lots of arable lands across the country. We will bring in the private sector to come and use the land in partnership with state governments to increase output.

From the CBN’s records, how many farmers have benefitted from the programme and what is the volume of rice produced by these farmers?

From inception in 2015, we have financed over 1.3 million farmers and they have cultivated over 1.3 million hectares of land across the country which would have produced an average of 5.5 million metric tons of paddy at 4 ton per hectare. That is quite significant. So if you look at the programme of Mr President of creating 10 million jobs, straight away on analyzing basis, we have created over 1.3 million jobs because you have a single farmer who, has people who do labour for him, he has people who do harvest for him, so for each hectare, we are looking at three to four additional jobs.

How much of the fund has been accessed for far?

Rice forms our biggest portfolio in the Anchor Borrower Programme and as we speak today, we’ve forwarded through the deposit money banks and other cosmetic financial institutions N264.4bn to rice farmers since 2015 to date.

What has the repayment process been like?

Repayment has not gone as expected like we planned. Typically, you would want to have 100% recovery but our recovery rate has continued to improve over the years. For instance, in 2019 dry season that we just did recently and harvest has commenced, we have already recovered over 50 percent of the fund even when the farms have not finished the production circle. We have put in place varieties of risk mitigation instruments and we have also deployed technology to be able to ensure that we mitigate side selling and eventually make sure the recovery is not dogged.