Source Punch: John Ameh and Ifeanyi Onuba, 18 March 2010

The House of Representatives on Wednesday began investigations into why the N200bn fund set aside to boost agriculture by the Federal Government in 2009 had not been disbursed to farmers.

In a resolution in Abuja, the House noted that the money provided under the Commercial Agriculture Credit Scheme, had been kept in selected commercial banks in the country for nearly one year without plausible reasons.

A former Chairman of the House Committee on Information and National Orientation, Mr. Dino Melaye, who sponsored a motion on the issue, informed the House that an estimated N32bn had accrued as interest on the funds.

He said, “Mr. Speaker, we all know that the interest rate in this country ranges from 18 to 25 per cent. “If we are to use an interest rate of 16 per cent, it means that about N32bn would have accrued on the N200bn in nearly one year.

“Where is the N200bn? Where is the interest it has accrued? This House owes Nigerian farmers the duty to investigate what has happened to this money and why the farmers cannot access it.”

Melaye disagreed with a recent statement credited to the former Minister of Agriculture and Water Resources, Dr. Sayyadi Abba-Ruma, to the effect that most farmers were unable to meet the requirements to access the loan.

One of the conditions set by the commercial banks is that a beneficiary should have collateral worth about N300m in his farm before accessing the loan.

But, Melaye claimed that the governors of the 36 states had already guaranteed the loans for farmers in their respective states, thereby transferring the burden of meeting the stringent condition on the states.

Contributing to the debate, the Chairman of the House Committee on Rules and Business, Mr. Ita Enang, called for the splitting of the Ministry of Agriculture and Water Resources into two on the grounds that it was too large as presently constituted.

Abba-Ruma had said earlier that the inability of farmers to organise themselves into cooperative groups as well as their failure to take advantage of the land reforms were key reasons why they could not access the fund.

In August last year, two banks-First Bank of Nigeria Plc and Union Bank of Nigeria Plc were each given N100bn (N50bn each) under the scheme.

However, their inability to effectively disburse the fund had prompted the apex bank to increase the number of participating banks to include Zenith Bank Plc, Guaranty Trust Bank Plc, and Unity Bank Plc.

However, Ruma in an interview with our correspondent in Abuja frowned at the development saying the situation if not corrected could hinder the country’s quest of growing its Gross Domestic Product through contributions from the non-oil sector particularly agriculture.

He said, “These farmers cannot access this facility until efforts are made towards making it accessible. The way out of this difficulty is to ensure that farmers are very well organised into cooperative groups. This is how it is being practiced in other jurisdictions that have succeeded in agriculture financing.

“You have to organise them because we have up to 20 million farm groups and this is why this administration commenced the land reform programme with a view to ensuring that the land that they have should be used as collateral but that will take a long time.”

Investigations revealed that the Technical Implementation of the apex bank and the Commercial Agriculture Credit Department of the Ministry of Agriculture had approved the first, second and third tranches of eligible companies that should benefit from the fund.

It was gathered that as a final step to enable these companies draw down the funds from these banks, the CBN had issued a letter of “No objection” to all of them

The Governor of the CBN, Mr. Lamido Sanusi had while admitting delays in the disbursement said,”They were delays in disbursing the money and we asked the banks to return the money to the CBN.

The pool remains N200bn, we had initially increased the number of banks to six banks and we said that any bank that is able to identify any commercially viable agricultural project to come and use the fund and I believe that as at December 31, 2009, about N43bn out of that money have been disbursed. So it’s an on-going process and you have to know that the banks are the ones taking the credit risks, so they have to ensure that their customers meet the prescribed requirement.”

Nigerian Bank Nigeria Central Bank Of Nigeria, First Bank of Nigeria Plc, Guaranty Trust Bank Plc, Union Bank of Nigeria Plc, Unity Bank Plc, Zenith Bank Plc