Nigeria Strengthens Large Commercial Farms With Over $1 Billion

Posted by Matt Hopkins|13 April 2009

Economic concerns have caused Nigerian President Umaru Musa Yar’adua to make funds available to the agricultural sector, specifically aimed towards large-scale commercial farming, reports the Daily Trust. Agriculture is one of the Yar’adua government’s seven-point agenda. Yar’adua is making funds available for through the Central Bank of Nigeria (CBN), which has submitted a comprehensive blueprint for the disbursement of almost US $1.36 billion in loan availability to commercial growers across the country. The release of the funds has been approved by the Federal Executive Council (FEC), and is expected to address food security issues in Nigeria. Currently, the majority of the country’s growers are small-scale subsistance farmers.

The loan is expected to be accessible only to large commercial farmers. Charles Soludu, the Governor of CBN, says the provision of the funds is part of government efforts to fund large-scale agriculture production, including processing and marketing. “We have put together the special fund to be used for this particular purpose,” Soludo says. “And this is for lending to commercial farmers, large-scale commercial farms that will actually help government to meet the demands of the food requirements of the economy.” According to Soludu, widely-practiced subsistence farming will not bring Nigeria “anywhere near” food sufficiency, and the government therefore needs to boost large-scale farming.

The fund will be disbursed to select banks for onward transmission to farmers. CBN Acting Director, Banking Supervision Dominic Eke says the banks are acting only as investors. Although First Bank, Unity Bank, and Union Bank have been over the years financing agricultural projects in the country, other banks such as Fidelity Bank Plc and United Bank for Africa (UBA) Plc have only recently become involved in agriculture. In February, UBA Plc floated a
$337 million plan said to be one of the largest private sector initiatives to support agricultural development in Nigeria.

Deputy Managing Director, UBA Plc, Phillips Odouza says the plan is part of cumulative efforts by the bank to jumpstart the agricultural sector. Says Odouza: “Given the decline in petroleum prices and the current global economic challenges, it has become imperative to begin to channel resources into the agric sector because of the multiplier effect it has on the economy.”