Source: Next
Original article available here.
NIGERIA, April 18 – New opportunities are emerging that may resolve Nigeria’s food challenge, as foreign investors eye Nigeria’s agricultural sector. The Mechanised Agric Micro Credit Investment Scheme (MAMCIS), an agricultural fund-raiser in Nigeria, has made $1 billion available for Nigerian farmers from foreign social investors interested in the agricultural sector in Nigeria.
The fund was made available by investors in South Africa and Dubai who are interested in the Nigerian soil and have the desire to transform crude farmers to mechanised farmers by making both money and equipment available for their occupation, thereby creating avenues for development and expansion.
Speaking at an event tagged “Need a Loan?” organised by the Smefunds Foundation (an NGO) on Thursday, 16 April, Benjamin Aduli, a top official of the investment scheme, spoke on how the fund would be disbursed. “The funds would be made available for Micro farmers. Each individual would have an access to a minimum of N500, 000 and a maximum of N10,000,000.
“This fund would be available for farmers who can plant and harvest any crop between six to 12 months. A mentor, who would be required to work with every applicant’s business plan, would be attached to every successful farmer.”
Mr. Aduli also stated that the interest rate will be between 7.5% to 15%, per annum, depending on the micro finance institution.
The organisation would buy off all the produce of those who acquired the loan so they don’t have to be sceptical of who would purchase their produce. However, the programme would not involve land availability.
Mr. Aduli said, “We would not get involved with land acquisition. You can lease it, rent it, buy it, but you would have to acquire it yourself.”
The Central Bank of Nigeria (CBN) guarantees 75 % of the loans given by organisation, according to its agriculture policies. It would also refund 40% profit to the farmers who make all their necessary payments promptly.
The loan is to be available for a 12-month’s tenure, according to a CBN regulation. However, it would be made available to microfinance banks for a period of 10 years so interested farmers can apply every revolving year.
To access the loan, an interested farmer would have to open an account in a microfinance bank. The individual must also contribute 6% of the desired loan as savings and would earn interest on such savings.
The applicant must also join a recognised co-operative society as farmers would access equipment such as tractors on lease arrangements through co-operative societies.
Already, the agricultural fund raising organisation is working in collaboration with some microfinance banks in Nigeria including Integrated Microfinance Bank, Kogi Microfinance Bank, and Solace Microfinance Bank, which are headquartered in Lagos, Kogi and Delta States respectively.
The organisation hopes to work with about 15 microfinance banks between April and June 2009, when the first 10,000 farmers would have received funding.
About 90% of Nigeria’s agricultural sector is dominated by its over 14 million smallholder farmers.
The average yield of major staple crops remains far below most of the other developing countries. It is well known that these smallholder farmers, who form the overwhelming majority of agricultural workers in Nigeria, face several constraints, including access to expansion funds, modern farm inputs like quality seeds, and fertilisers.
These challenges force them to pay high transport costs to towns where agricultural inputs can be found. As a result, yields are low and soil nutrients are depleted. Nigerian farmers also have limited access to public extension services and little or no access to funding, which makes it virtually impossible for poor farmers to increase their yield or incomes, reinforcing poverty.
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