The Central Bank is demonstrating determination to rebuild the agriculture ‘pillar’ and boost agricultural development through development financing.
Agricultural development is one of the five major strategic combination methodologies needed to create quantum leap growth and sustainable development in the Nigerian economy. Other methodologies are the application of ‘The Big Push’, Schumpetarian growth model, Endogenous growth model and Interventionist policies.
Briefly, ‘The Big Push’ ‘’suggests that countries need to jump from one stage of development to another through a virtuous cycle in which large investments in infrastructure and education coupled with private investments would move the economy to a more productive stage.’’ The Nigerian economy, by now, needed to have jumped from the factor-driven stage where it has been for 58 years to the efficiency-driven stage which is next in the concentric rings of economic development, but not so.
The Schumpetarian growth model hinges on creative destruction, which is about innovation and technology. Innovation is crucial for economic development; economies which fail to innovate are noted to fall off the path of growth. Endogenous growth model argues that economic growth is generated from within a system as a direct result of internal processes and not external forces. There is need to look inwards to maximise our potential including our huge population.
Interventionist policies are needed at one point or the other to promote industrialization and protect local industries until they reach a level of development where they are able to compete in the global market. Major developed countries including the USA used interventionist economic policies at one point or the other. In the 1970s, the USA used Import Substitution Industrialization (ISI) as a means to promote national and regional development in the ‘’Buy American Campaign.’’
It is therefore commendable that the Central Bank of Nigeria (CBN) evolved an interventionist policy by the exclusion of 41 items from the Interbank foreign exchange market to encourage local manufacturing and conserve foreign reserve.
For agricultural development, the importance as a fundamental pillar for economic growth and development especially in developing countries cannot be overemphasized. Agriculture has been described as ‘’the root of civilization’’, ‘’the starting chain of the economy, and base for the daily life.’’
It has been noted that a nation can hardly sustain its economic growth without a strong agricultural base and the reasons are obvious. Agriculture provides food, raw materials and employment and it is bandied that agriculture is the largest provider of employment, and it is estimated that more than 65 per cent of industries and business activities are supported by agriculture at primary and secondary levels.
Agriculture is also important in International Trade, it helps to reduce balance of trade, reduce import, increase export, generate foreign exchange; impacts transportation, helps to improve standard of living of the people. Many advanced economies including the USA developed on the back of agriculture, but progressively, agriculture contributes a smaller percentage to the national income of advanced economies, unlike developing economies.
The Nigerian economy which was initially powered by agriculture would have been more advanced by now, may be, but for the advent of petrodollar which stunted agricultural development and truncated the trajectory of the economy. While agriculture encouraged hard work, petrodollar provided easy money and aggravated corruption with a few privileged individuals who are connected at corporate and national power centres appropriating to themselves a greater chunk of the national wealth.
Though past governments have tried to recreate agriculture through various schemes such as ‘’Operation Feed the Nation’’, ‘’Green Revolution’’, ‘’Directorate of Food, Road and Rural Infrastructure’’ (DFFRI) and others, but none created the desired maximum impact basically because of mass disenchantment for agriculture arising from urbanization, and inadequate financing.
But the Central Bank of Nigeria is demonstrating determination to rebuild the agriculture ‘pillar’ and boost agricultural development through intensified development financing. Development finance, as noted by Smita Ram, ‘’aims to serve people and communities beyond the pale of mainstream. Credit is transformed from an instrument of finance to one of social emancipation and progress.’’
Accordingly, Central Bank of Nigeria developed various special initiatives for concessionary funding for agriculture with the overall objectives of fast tracking development of the agricultural sector by providing credit facilities to commercial agricultural enterprises at a single interest rate, enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting lower food inflation.
Other objectives are: to reduce the cost of credit in agricultural production to enable farmers exploit the potential of the sector, increase output, generate employment, diversify revenue base, increase foreign exchange earnings and provide input for the industrial sector on sustainable basis.
Some of the special initiatives for concessionary funding include the Commercial Agriculture Credit Scheme (CACS) established in collaboration with the Federal Government (represented by the Federal Ministry of Agriculture and Rural Development), Agricultural Credit Guarantee Scheme (ACGS), Interest Draw-back Programme, Agriculture Support Scheme, Nigerian Incentive-Based Risk Sharing in Agricultural Lending Programme (NIRSAL) and Anchor Borrowers Programme among others.
Central Bank of Nigeria noted that the special initiatives are creating the desired impact and generating employment. According to the apex bank, 7 million jobs have been created through its development finance interventions with the Agriculture Guarantee Credit Scheme accounting for 5 million jobs, the Commercial Agriculture Credit Scheme- 1 million jobs, while the Accelerated Agricultural Development to be established with the Federal Ministry of Agriculture and Rural Development aims at the pilot stage to create at least 10,000 jobs in each state of the federation.
Nwobu, a Chartered Stockbroker and Business Journalist wrote via arizenwobu@ yahoo.com Tel: 08033021230