Based on a Punch news report, the Minister of Agriculture and Rural Development, Mohammad Abubakar, stated on Thursday that the Federal Government has approved new incentives for investors in the agricultural sector to improve private sector participation in the nation’s food production and processing industry. These incentives include tax and duty-free holidays for a period of five years for agricultural production and processing in Nigeria; tax-free agricultural loans with a moratorium period of over 18 months and repayment period of not more than seven years; and zero-tariff rates on the importation of agro chemicals. 

There have been concerted efforts by the Federal Government to boost agricultural output, and there have been several schemes created to achieve this aim. In November 2015, the CBN, in partnership with the Presidency, launched the Anchors Borrowers Programme (ABP) to create a linkage between anchor companies that specializes in processing agricultural commodities and smallholder farmers in the country. This led to the disbursement of loans for farm inputs to many smallholder farmers through financial institutions within the country (DMBs, DFIs & MFBs). While financial institutions got loans from the CBN at 2.0%, farmers got the loans at an interest rate of 9.0%. 

Prior to the launch of the ABP, the CBN in collaboration with the Federal Ministry of Agriculture and Water Resources (FMA&WR) in 2009, established the Commercial Agriculture Credit Scheme (CACS) to provide finance for the country’s agricultural value chain namely production, processing, storage, and marketing. Under the CACS, loans are provided to commercial farmers at a maximum interest of 9%. The scheme also allows for a moratorium in the loan repayment schedule, taking into consideration the gestation period of the enterprise. 

Despite these initiatives and many others by the CBN, the agriculture sector appears to have seen no real significant growth. Since the inception of the ABP in 2015, the agriculture sector has grown by an average of 2.9% between 2015 and 2021 which is lower compared to the prior 5 years (2010 -2014) and 10 years (2005 - 2014), when the sector grew by an average of 4.5% and 5.7% respectively. In our view, apart from some gaps in the administration and disbursement of funds under these schemes, the insecurity in the food producing regions amidst several structural problems affecting the sector continue to limit growth.