Banks have refused to lend to agriculture and manufacturing sector, despite the injection of N1 billion into the economy. Central Bank of Nigeria, CBN, after the Monetary Committee Meeting in September 2016. NATION, September 21, 2016, p 1.
Ask anybody claiming to be an expert on economic recovery to offer a solution to the current recession and most likely the answer would be diversification of the economy. Ask further which sector should attract priority interest, and the answer would be agriculture.
For good measure, the expert would remind everybody that before the Age of Oil exploded on Nigeria in 1973, the country was a large exporter of several products cocoa, rubber, cotton, palm oil, groundnuts, coal, hides and skins, tin, rubber etc; and when the three Regional Marketing Boards East, North and West had offices in London to handle the export of products from their own particular region.
There was healthy competition among them, the Federal Government was mostly a spectator and there was FISCAL FEDERALISM. Dmatrixnews learned that each region collected its own export revenue, kept fifty (50) per cent for itself and sent the rest to the Federal Government to be shared again. No region went to the Federal Government to beg for money; each region determined the wages and salaries it paid to its workers and imposed its own taxes.
The old generation experts would recall the time when groundnut “pyramids the best symbol of our lost past — were common in Kano but few of us remember when the last one disappeared. Fewer still would recollect that Nigeria was the largest exporter of palm oil and kernels until the late 1960s, the second largest exporter of cocoa and the third largest exporter of rubber.
If all the experts advising government and the government officials pronouncing agriculture as the way out of our current recession and the key to diversification were to look around, they would receive a collective shock which a brief situation report on the three commodities highlighted above would administer.
Today Nigeria ranks very low in the export of rubber.
Indeed, if our rubber exporters were to withhold their supplies the world would not notice the difference.
Nigeria has dropped from second to seventh among global cocoa exporters in 2016. Again, our supplies if not received will hardly cause a ripple in world commodity prizes.
The real shock is provided by palm oil and kernels. In the 1960s this country was the largest exporter and the world literally could not do without us. Today, Nigeria is not even a net-exporter of what is now broadly labeled vegetable oil, but a net-importer. Once we dictated the terms; today we do not count except as a market for export from other nations.
Two days ago, we celebrated our 56th independence anniversary and we are in the 43rd year when our dependence on crude oil induced us to lose our senses as a nation; when one government after another increasingly led us away from all the commodities which sustained our economy, effortlessly provided diversity and guaranteed sustainable growth. Instead, from Gowon to Buhari, all every Head of State had asked of us is to be docile and lazy while the easy money coming from crude oil export was shared.
That was bad enough. For every single one of those forty-three years, we had surrendered more and more of our global market share for all the commodities which rewarded us with balance of payment surpluses before the curse of crude oil.
Even if we can increase our output of cocoa, groundnuts, palm oil, rubber etc to regain our pre-oil positions, we would be deluding ourselves to expect the nations which have carved out huge market shares to surrender them without a long lasting struggle for which we are not even prepared. When we might have recreated the groundnut pyramids and produced the rivers of palm oil and rubber, who will market them?
Are we not even assuming that universal demand for those commodities is infinitely elastic as to absorb all the incremental supply from Nigeria? Lastly, have we asked ourselves the simple question: where are the farmers to make the revival possible? Nothing is more self-deceptive than the conventional wisdom that our graduates would go to the farms or the notion that our unemployed youths would do it.
Just ask any son, daughter, nephew and niece, siblings who are graduates whether they would want to go to the farm and be prepared for another shock. Even those who started their lives in rural areas where the farms are located are not ready for the hardships of that life; no power supply, no potable water, health care, and no fun.
Serious as all these other considerations are, they pale by comparison with the major reason why the self- deception on agriculture will get us nowhere. In fact, they are likely to make things worse in two, five, ten or twenty years from now as this real case study will illustrate.
Mr S earlier this year went to one of the banks he had been patronizing for over ten years intending to raise a loan of one million naira to start a pilot poultry project for two of his nephews, recent graduates, to help them with self-employment. At the time of making the request, he had two fixed deposit accounts totaling six million with the bank which he was prepared to offer as collateral. Prior to that, Mr S had borrowed N4 million from the same bank four years before to finance the purchase of a personal car. He had five million in his fixed deposit account.
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The car loan was approved; the agriculture loan refused. The Marketing Officer for the bank, during the last meeting with the client, finally broke down and made two confessions, begging not to be identified. One, agriculture loans take a long time to process even when the applicant has adequate collaterals.
Two, the bank actually is not keen on loans to farmers this year; the primary function of the Marketing Officers is to mobilize resources. In other words, the bank would accept deposits from farmers after they have made the money from their own efforts. But, the bank will not help them to make it.
That real case study and the CBN statement above summarise totally how we deceive ourselves. Before the CBN disclosure, which in actual fact is no news, the Minister of Agriculture, Chief Audu Ogbeh, had made the same point months ago.
Vanguard
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