How we plan to use $1.2bn agric loan from Brazil —Buhari’s aide

February 23, 2021
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Nigeria is hoping to secure a $1.2 billion loan from Brazil to improve farm mechanisation. Senior Special Assistant to President Muhammdu Buhari on Agriculture, Dr. Andrew Kwasari, gives insight on how the loan would be used. He highlights other intervention programmes to assist smallholder farmers. COLLINS NNABUIFE, bring excerpts:

YOU talked about loan for Green Imperative, what is it all about?

The green imperative is an agricultural bilateral projects that has been agreed upon to be delivered in Nigeria between Nigeria and the government of Brazil. This project has been in the making for quite some time now, we have reached a point where we are completely ready for its take off and the green imperative will address two twin issues with agricultural modernization in Nigeria, provide mechanization and provide Agro-processing, and these two work hand in hand through what we call service centers and these service centers will be created in each local government across the country to complement support to primary production through mechanization and value addition to agro-processing, and this as I said, it has carefully been designed over the years.

We are happy to have this update today because we have been waiting for the National Assembly to give a go ahead to activate this loan and the minister of Agriculture sent to me to speak with the Chairman Senate Committee on agriculture, the Chairman House Committee on agriculture and we have reached a good point where they have transmitted the letter to consider this borrowing because Mr. President has requested for it, but they stepped it down in order to consider the budget amendment 2020, now is the right time to take off on this and we can discuss in details what this project will bring and how it will be run.

How will the loan be implemented?

The most important thing is it is private sector-driven. So all the service centers will be owned and operated by private entrepreneurs and this private entrepreneurs will have the responsibility of servicing the loan. So in short if we are to summarize green imperative, it’s a borrowing that would inject foreign direct investment of €995 million or $1.2 billion that has been structured financially to allow the government of Nigeria have bilateral negotiation and arrive at a financing that is below 3 per cent per annum interest rate and also have long gestation period of about 15 years to repay.

And then subsequently structured such that this loan having been secured, Nigeria reinsured it in the insurance market, so we have financing coming from Deutsche Bank, Development Bank of Brazil, and then it is reinsured by Islamic Development Bank, the Islamic cooperation for Insurance of Export Credit.

Subsequently, then the loan is structured with a monetary policy from Central Bank, which has been developed jointly by Central Bank, Ministry of Finance and the Ministry of Agriculture to allow the onlending of this loan to the entrepreneurs and this entrepreneurs will be dealing with a loan at the domestic level. So what comes to our local entrepreneurs is Naira denominated loan with a monetary policy, the draft of which has been finalized between central bank and the participating financial institutions that will allow our entrepreneurs take up this loan and utilize it and pay back effectively.

So Nigeria is leveraging its bilateral understanding to secure a very cheap loan for entrepreneurs that are private sector people and the private sector people will run the businesses of the service center.

What are the modalities for acquiring the farm machines?

It is always important that we explain the green imperative in the light of a new way of doing business by government. We always know that government buy tractors, even governors at state level buy tractors and give them out to farmers.

So the new way is not to buy tractors as government. So government of Nigeria has no power under this program to import a single tractor. The tractors will come in selected make, and what implement should follow and everything by the service center operators (private sector) which have to be selected.

So order placement for shipment or procurement will come from the individuals or entities that will run this business meaning that the first thing is to make sure that we respect the selection criteria which has been jointly agreed between Nigeria and Brazil to be transparent and to be focused on entrepreneurs that can run the service centers as a business, selling services to smallholder farmers

We we have done the analysis that the service fees will be far cheaper than currently being paid because what is happening is with the way federal government acquired this loan, it is the cost of a complete implement or equipment to sell services will be cheaper than buying them in the open market

Assemblage will happen here. We found out that we have assemble plants across this country that are owned by private sectors, but they are not in full use now.

So we thought that just as it was possible to get our blending plans to start blending fertilizer locally, we can use the same model for tractor manufacturing.

So we have identified the plants already, we have had couple of meetings with the owners of the assemble plants in each of the geopolitical zones.

We have seen that what would be supplied since this loan is in kind from the manufacturers in Brazil must come and ready for assemble in Nigeria, so our assemble plant owners are excited that they will start providing these services and eventually going to full manufacturing of tractor as our power supply and steel supply becomes competitive and stable.

 

Explain the Agriculture for Food and Jobs initiative?

It is the response from the federal government to cushion the impact of Covid-19 on smallholder farmers and on agriculture and it is a loan, a total package of about N600 billion over one year and basically what was designed and what we’re implementing is first, government’s said to do this, we need to work with the commercial Banks and to get this loan from the commercial Banks working with Central Bank is to agree that federal government needs to cushion the effect in two ways for the smallholder farmers, one, create easy access to loan and two, assist in reducing the interest, that means paying the interest on behalf of the farmers.

To structure the Agriculture for Food and Job to achieve this, we then needed a second leg, which is the private companies that would be responsible for coordinating the farmers and making sure that the loan get to the coordinated farmers and the harvest also get into the supply chain locally to improve our supply chain of locally produced food.

 

How do you intend to reach the farmers?

Another thing that we get quickly added was that we needed a clear data base of farmers that will allow us target these farmers across the major commodities that were prioritized.

So we started in July by enumerating farmers. To enumerate farmers, what we did was that in this office the federal Minister of Agriculture worked with the ex-Npower agro youths. We’ve had these youths that were receiving stipends and then they’ve been exited and they were trained by Federal Minister of Agriculture to provide some kind of support to farmers in their localities.

So we identify 72,000 of them we trained them and then we developed an ODK App that works on Android and deployed it on their device because they already have either smartphone or a device. All of this were done between May and June and we launched the completion of training and pilot in June basically without contact with them under this Covid-19.

These enumerators then went out there and worked with the state architecture. The state architecture works like this on extension services farmer registration and good agronomic practice, there is a project manager in every state who is the project manager of the Agriculture Development Project (ADP) established under the World Bank. These project managers are responsible for coordinating the farmer integration that the federal government is conducting in every state.

So we then send this enumerators to the wards to be supervised by the master trainers, and the master trainers are coordinated by the project managers and there’s one project manager in each state plus FCT, and there are as many master trainers as local governments exist in each state.

From June 4th when we started this enumeration, we have today a database with entry of 5.7 million Farmers clearly linked to their Farms with their facial, the GIS of their farm and everything.

Out of this, we have begun to form databases that will be clear and set for use, one good case that we have achieved is that we are finalizing with Central Bank and private sector companies on how to give direct support to these Farmers.

We are starting with dry season, we have now carefully used the GIS of the Farms registered in all the states to identify farmers that are around bodies of water that means for you to qualify for dry season support on this zero interest loan from federal government, you must either be within reach of Water Resources by nature of been around a dam, a river, lake, a Fadama area or your farm shows that you have a tube well, and we have clearly identified today over 140,000 of these farmers and we have clustered them into 4116 clusters down to the ward where they’re living, and the farmers are excited because we’re able to reach them with no need for anyone passing the resources on their behalf, they are going to get the resources direct to them and that the private companies what we call platform partners are working with these farmers. So in each cluster, we also created a private company that would organize delivery of extension services and will be responsible to aggregate a portion of the harvest that is equivalent to the non-capital while federal government pays the interest on the loan.

So basically we are happy to announce today that all is set for the dry season and we are piloting preparatory to a big scheme in 2021 wet season, which we will commence work on by the end of this month. We have a good sample size to test our own medicine whether it’s possible for Nigerian government to support smallholder Farmers directly without middlemen and without arbitrary decision making using the location of the farm of a farmer and the facial and everything and to create a loan that is fit for your farm size.

 

How many commodity value chain are you targeting?

Under this dry season pilot, we’re doing cassava, rice, Maize, poultry for meat (broiler), aquaculture and cattle fattening.

So, these are the 6 commodities that we are piloting with over 140,000 farmers. This is the first pilot on this database that we have created, and again, it is very important to announce that we are opening the portal again for continuous farmer enumeration until we get to 10 million farmers. And once we get 10 million farmers, the two ministers of Agriculture and Finance have directed that we transfer this capibility to the state so that they continue. Because we know that smallholder farmers could be up to 100 million in this country, so we are just doing the first 10 million, we have crossed the 5 million now, we will continue to 10 million. Once we have 10 million on record, we have a clear mandate under the economic sustainability plan to train the state team to continue with this enumeration in order to achieve that we have, to transfer the same capability we have in this secretariat to each state under the project manager of the ADP so that they can continue to register and enumerate and map our farmer land.

Our hope is that in the next two years everywhere a farmer is known in this country would have being captured in this database and the database is protected and the farmers details are managed by federal and state government in a synchronized manner without people just going and doing some farmer registration here and there and if possible selling off the data of farmers, but this one will be protected for policymaking, decision-making, Intervention Program design and collaborative work between federal and state government.

So I think for us in agriculture, the covid-19 created is opportunity to be able to bring innovation into Agriculture and we have found this innovation work through this database and now we have finalised loan package for over 140,000 farmers and we could do up to five million in the the wet season 2021.

One last thing that I must add in agricultural food and jobs is that payment also have been consistent. We have made first, second and third payments, and I know you people have been contacted by the enumerators, why are we not paying them? We had a difficult moment after the first and second payment where the accountant General’s office say now that we are sure that this activity is going on at the state level, they would like us to migrate all the enumerators to the Gifmis platform so that accountant General does the payment for farmer enumeration and Farm Mapping directly from the Accountant General’s office.

So this we have achieved now we have uploaded all the enumerators to the Accountant General’s Gifmis portal, we have uploaded all the project managers, the State master trainers and the supervisors and the support staff and the last payment that was done I think it was over N500 million was done directly from Gifmis to this foot soldiers that are in every ward and every local government doing this enumeration.

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