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CBN’s new agric policy seeks to cut N630bn food import bill

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CBN’s new agric policy seeks to cut N630bn food import bill


A new Central Bank of Nigeria (CBN) policy on agriculture is poised to reduce the N630 billion annual bill which the country has had to contend with all these years.

Sanusi Lamido Sanusi, the CBN governor, who lamented that the growth in the agricultural sector has yet to sufficiently impact on the socio-economic lives of the nation, stressed that the country has continued to settle huge import bills which annually runs into about N630 billion.

At a stakeholders’ conference on Nigeria’s Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), organised by the CBN, Sanusi disclosed that Nigeria imports some N165 billion worth of wheat; N105 billion worth of fish; spends N75 billion on rice and N60 billion on sugar importation annually.

Jonathan, who was represented at the event by Vice President Namadi Sambo, regretted that Nigeria has become a net importer of food, especially wheat, sugar, rice and fish – all of which runs into billions of naira due to declining productivity and output.

He said the fundamental structure of Nigeria’s economy as an import-dependent one is largely responsible for the continuing decline of the external reserves; a trend which he said was unacceptable.

NIRSAL, which has been estimated to gulp about N77.5 billion for its implementation, is an innovative mechanism aimed at de-risking agriculture in order to motivate banks to unlock the enormous financial resources for the sector through increased lending.

The CBN governor, who further noted that NIRSAL was being introduced as a holistic transformation of the agricultural system, by addressing the gaps in both agricultural and financial value chain, said NIRSAL, was an outcome of a Memorandum of Understanding (MoU) signed between the CBN and the Alliance for Green Revolution In Africa (AGRA) with the latter given the mandate to develop an integrated model to unlock access to affordable financing to agriculture for the benefit of Nigerian farmers and others in the agricultural value chain.

According to him, the scheme was being introduced as a result of the several challenges in the agricultural sector in the past five years, particularly inadequate financing.

Sanusi later disclosed that NIRSAL has five pillars that are designed to de-risk the financing value chain, build long-term capabilities and institutionalise agric-lending incentives.

The five, according to him, include: Risk Sharing Facility, estimated to gulp N46.5 billion out of the total N77.5 billion; Insurance Facility (IF), for which about N4.65 billion has been budgeted and Technical Assistance Facility put at N9.3 billion.

Others are: Agricultural Bank Rating System (ABRS), estimated to take N1.556 billion and Bank Incentive Mechanism (BIM), for which N15.5 billion has been planned.

The apex bank boss said the initiative is expected to generate an additional N465 billion ($3 billion) of bank lending within ten years to increase agricultural lending from the current 1.4 percent to 7 percent. Aside this, Sanusi said it is also expected to reduce banks’ break-even interest to borrowers from 7.5 to 10.5 percent, among other expectations.

The President, meanwhile, is optimistic that agriculture has the potential to sustain a more equitable growth compared to even the oil and gas sectors and can grow its output from the current output of N15.25 trillion to N39.4 trillion by 2030.

Commending the CBN for the NIRSAL initiative, he urged investors to collaborate with government to explore this huge potential in the agriculture sector, as well as others to grow the economy.

President Jonathan, who listed the major factors militating against the nation’s agriculture growth to include power and transportation, promised that these will be resolved, even as he also promised that contract will soon be awarded for the construction of a fast track link between Lagos and Ibadan.

He said design work is in progress for the East West rail lines that will connect Lagos to Calabar and the East West coastal road.

Construction roads and bridges are also ongoing and on completion of dredging River Niger, River Benue will be dredged up to Yola.

The President disclosed that Foreign Direct Investment (FDI) into the country rose to $11 billion by 2009, the highest in Africa and the 19th largest recipient of FDI in the world, having peaked at $1.1 billion in 2001 to $2.1 billion by 2004.

Announcing this in Abuja on Tuesday, the President said it was an evidence of Nigeria’s potential to become Africa’s financial hub and one of the 20 largest economies in the world by 2020, a dream which he said, was quite achievable.

“Nigeria has already made it into the top 20 global destinations for Foreign Direct Investments (FDI) and had been growing steadily in the last decade,” he said.

He reiterated his administration’s determination to transform Nigeria into an industrialised nation and join the group of Brazil, Russia, India, China, and recently South Africa, called the BRICS.

He said government was already implementing several programmes aimed at promoting best practices in agricultural development, including FADAMA 111 and others being implemented by the Ministry of Agriculture.

He noted that these programmes are beginning to yield results as sectoral analysis indicate that in the last five years, the agricultural sector contributed about 40 percent of the GDP and generated about 50 percent of employment.

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Updated 5 Years ago

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Tags:     Sanusi Lamido Sanusi     CBN governor