Jerry Gushop is the Head of
Agribusiness, Stanbic IBTC Bank. In this interview with Financial Vanguard, he spoke on the bank’s involvement in agribusiness financing in Nigeria. Specifically, he said the bank has disbursed in excess of N25 billion in the CBN’s Commercial Agriculture Credit Scheme, CACS. He also spoke on the impact of various initiatives put in place by the federal government to change the face of agribusiness in Nigeria.
Excerpts: Calls have been strident, both within and outside Africa, that in order to guarantee food security, funding for agriculture must increase.
IN YOUR OPINION, IS AGRICULTURE UNDERFUNDED IN AFRICA AND MORE SPECIFICALLY IN NIGERIA?
This is absolutely correct considering the rapidly growing population of most African countries. Nigeria, for instance,
was a strong agricultural produce
exporting country prior to the oil boom era, with very strong export volumes and value in produce like cocoa and rubber. You very well know that the first palm kernel seed planted in Malaysia was taken from Nigeria, and that country today is one of the world’s largest exporters of palm oil. Agricultural funding is gradually increasing via various funding initiatives and I will touch on this as I go on.
My strong opinion is that the low crude oil price has and is helping to change the general mindset of Nigerians with more private investors initiating projects focused on commodities and grains with strong export potentials, such as cocoa, sesame seeds or foreign exchange conservation potentials, like rice and soya beans. It may interest you to know that the CBN intervention fund initiatives have also been focused in these regards as well. Now, to your direct question on funding of agriculture in Nigeria; the reality is that with a population that has grown from about 30 million in the late 60’s
and early 70’s to almost 200 million now, I would say funding has not grown exponentially vis-à-vis our population growth in order to guarantee food security and also contribute immensely towards increasing our Foreign Exchange, Fx, earnings as a country.
A main culprit for the high level of
subsistence farming practiced in the country is largely attributable to education and this has begun to change with the entrance of a new generation of farmers into the sector, which has brought new ways of doing things. However, the various successful Outgrower Schemes have made it possible for a good number of subsistence farmers to acquire the requisite knowledge and skills that can make them break out of this level of operation.
HOW WILL YOU ASSESS THE EFFECTIVENESS OF THE COMMERCIAL AGRICULTURE CREDIT SCHEME, CACS, USING STANBIC IBTC’s INVOLVEMENT AS MARKER?
Stanbic IBTC Bank has featured
prominently in the CBN CACS initiative, having disbursed funds in excess of N25 billion since commencement of the Scheme between 2008 and 2009. The availability of single digit pricing on facilities has provided immense opportunities for medium sized manufacturers like Integrated Dairies Limited, manufacturers of Farm Fresh Yogurt, and Novum Agric Industries, manufacturers of Supreme Brand of Animal Feed. This has enabled them to not only remain competitive in cost of
production versus product pricing
against imported brands, but has also been profitable for the banks due to less attrition as a result of performing loans in most cases.
I must also add that the scheme has contributed immensely to the
development of agriculture in Nigeria, with a lot of projects being initiated and supported across the agriculture value chain, most especially core manufacturing, processing, poultry and in more recent times, production with strong backward integration initiatives being driven by organisations like Olam,
Erisco, Dangote, and Nalmaco, among others.
CAN YOU OUTLINE SOME OF THE MAJOR DEALS STANBIC IBTC HAS CONSUMMATED IN THE agriculture SECTOR IN THE LAST COUPLE OF YEARS?
Stanbic IBTC Bank has consummated and participated in some major deals across the agriculture value chain over the last couple of years. Some of the
deals include the Dangote Industries, N35billion; Flour Mills Nigeria, N27.68billion; Olam Nigeria, N11.2billion; Grand Cereals, N3billion; Integrated Dairies, N2billion; and Livestock Feeds Ltd, N1.1billion.
The sector’s contribution to GDP has remained unimpressive, partly because it still operates at a subsistence level.
HOW IMPORTANT CAN AGRICULTURE BECOME TO NIGERIA AND ITS GDP AS ECONOMIC DIVERSIFICATIONs GAINS PRIMACY?
The importance of agriculture towards diversifying the Nigerian economy cannot be overemphasize considering
current realities we are facing with a largely mono-product economy mainly dependent on oil exports. As highlighted earlier, various initiatives currently being promoted via local and international intervention funds are gradually supporting a reduction in the level of agricultural practices at a subsistence level.