Ex-President Obasanjo Decries Double-Digit Interest Agriculture Loans

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News in brief: Former Nigerian president, Olusegun Obasanjo, criticised the high interest rates on agriculture loans. He called for mass participation in the sector.

Olusegun Obasanjo, a former president of Nigeria, has condemned the high interest rate that lenders charge farmers on agricultural loans. In his keynote address at the Agribusiness Investors’ Network, he claimed that researchers, financial institutions and government are all in a conspiracy to frustrate agric business owners, according to this news report.

Innovative Youth in Agriculture (I-Youth), a project that the International Institute of Tropical Agriculture (IITA) and Mastercard Foundation Young Africa Works Program started together, organised the event in Lagos. The project seeks to empower youth with necessary skills to find employment and entrepreneurship opportunities in agri-food value chains.

Obasanjo said that the double-digit interest rate that banks give farmers on loans prohibits them from accessing funding. Meanwhile, this article has show that lack of funding is one of the major issues that Nigeria’s agricultural sector faces. Also, adopting innovative ways to improve yield requires financing.

Interest rates discourage farmers from taking loans

Even the Central Bank of Nigeria’s (CBN) Commercial Agriculture Credit Scheme (CACS) is just two per cent shy of double digit interests, at 8 per cent. Although, the apex bank promises a 6 per cent rebate for farmers who borrow from commercial banks at 14 per cent, providing subsidy on their borrowing as part of the scheme. It does say that this rebate only applies to ‘qualified’ farmers and agro-allied entrepreneurs.

This scheme does not cover much as it only provided 31,666 loans in 2021, which is nowhere near the number of farmers and agro-allied business owners in the country. The rest, who don’t benefit from the scheme are left at the mercy of commercial banks. At the latest interest rate, commercial banks can lend at as high as 19.5% or as low as 11.5%.

The former head of state added that in order to drive Nigeria’s agriculture to self-sufficiency, efforts should go beyond tokenism. A large portion of the country’s populace have to be involved. However, stats show that Nigeria already has more than 70% of its population participating in crop farming. So, the issue is more than mass participation and borders on efficiency.

It is little wonder why Obasanjo, who also owns a farm, suggested that stakeholders encourage a new generation of farmers to take over from the older ones. He mentioned that his own cousin is the youngest farmer in his village and he is already 75 years old. This article makes the same argument about the need for young people to enter the sector.

“We need to see agriculture as being less of talk and more of action, timely action, right actions. Whatever you are doing in agriculture requires action and attention.

“Agriculture is a serious business that requires commitment, funding, reasonable cost, right and appropriate inputs, beginning from seeds. It requires stability and predictability,” the former president said.

Obinna Onwuasoanya
Obinna Onwuasoanya
Obinna Onwuasoanya is a tech reporter of over five years, fiction writer, SEO expert and an editor. He is based in Lagos, Nigeria, and was previously shortlisted for the Writivism Short Story Prize 2018.

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