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By Chinyere Anyanwu
For many Nigerian agribusiness start-ups, ambition and innovation are certainly enough. Despite introducing fresh ideas and modern farming techniques, young entrepreneurs are battling funding shortages.
The cash crunch is stifling growth, slowing expansion plans and threatening the sector’s ability to create jobs and boost food production.
For experts, feeding Nigeria’s 237.5 million population, the largest in Africa, requires huge investment in agricultural production and agribusiness, and the government alone cannot shoulder the responsibility.
The country has a myriad of smallholder farmers and agribusiness start-ups spread across its various regions actively engaging in food production in the numerous value chains.
Though confronted with challenges ranging from insecurity (banditry and farmers/herders conflicts), climate change issues (flooding and droughts), severe infrastructural deficits including poor road networks, erratic power supply, insufficient storage facilities, high costs of inputs like fertiliser, high yielding seeds and poor implementation of supportive policies, players in this sector, especially start-ups, lament that limited farmer access to affordable credit/finance, seems to be the most critical.
They insist that though the Bank of Agriculture (BOA) offers production loans for around 9 per cent, while some commercial banks’ credits come at the interest rate of between 14 per cent and 20 per cent, the bottlenecks encountered in the process of accessing the loans do not encourage anyone to pursue them.
Reacting to the issue of the challenges posed by limited access to funds in the operations of agribusiness start-ups in the country, the Chief Executive Officer of Smart360 Farms Ltd., Smart Chukwudi, noted that, “a lot of farmers lack access to finance and there is little or nothing you can do without funds. People need funds for agricultural production, especially starters. For instance, when I was venturing into agribusiness, I approached some banks. They were asking for collateral that I didn’t have. One of them that showed interest in giving me a loan of N1 million was asking for 50 per cent interest. How can a smallholder farmer survive under that kind of condition?”
For Amaka Chukwudum, Founder/Chief Executive Officer of Amicable Mondiale Farms and President of Organic Dynasty for African Agro-Innovators (ODAI), availability of easy-to-access agricultural production funds will bring more people into the food production space, thereby tackling food insecurity.
Narrating her experience in her bid to access loans for her food production business, she said, “when I tried accessing an agricultural loan through the Bank of Industry (BoI) meant for women, I made efforts to access it but the bottlenecks seemed insurmountable. A simple farmer cannot attain their requirements. The only people that can attain it are those who don’t need the loan.
“I am a farmer and I need machines to process my produce. A simple rice mill line is not less than N10 million.
I went to BoI to ask for a loan of N10 million and they are asking me to get someone who can stand as a guarantor who has a net worth of property not less than N14 million. In this economy, who is willing to stand for you with their assets? I told them I have 10 acres of land; can’t it be a collateral for me? An acre of land in the area where the land is located is worth N2 million now so 10 acres are worth N20 million. They insisted it must have C of O. How many farmers in Nigeria have C of Os on lands they are farming on? I have my Deed of Assignment and other papers; it’s already fenced round, and my farm project is going on there so why can’t I use it to get a loan? They said no.
“So the way they kept the simple things a farmer can get shows it’s obviously not the farmer they have in mind. It’s the high networth individuals they have in mind. With the way they set their policies, the real people the loans are meant for cannot access them. They need to change these policies if they really want to see food in Nigeria. A lot of farms are shutting down because of lack of capital.
The government and its agencies should make these provisions, especially funds, accessible.”
Chukwudum further said, “I want to boost my production, to expand my food processing capacity, especially rice and garri. The fabricator is waiting for me because I have dropped some money but I need N10 million to complete the money but I can’t access it from BoI.
Why are they there? They can come and investigate my farm to confirm my claims but they have refused to make any move.”
Also reacting to the issue, the President of Ogbonge Women Farmers, Joy Onime, said funding is critical to the survival and growth of agribusiness start-ups in the country but noted that access to it is a huge challenge.
According to her, “accessing the kind of fund needed to operate profitably might be difficult for an agribusiness start-up because of the interest rates demanded by banks. The single digit interest is still on the high side if at all you see it. The interest rate still needs to go down more for any agribusiness start-up to do well.”
She, however, advised start-ups to go for grants, which are interest-free.
