Between finance institutions and agribusinesses

The importance of agriculture in economic development cannot be overstated. Despite the strategic place agriculture occupies, many financial institutions are unable to extend necessary support as a result of some gaps that need to be closed, if this sector is to remain relevant in the scheme of things.

This is the position of panelists during the Nigerian Bar Association Section on Business Law (NBA-SBL) Business Law Weekly Webinar Season 3, Episode 2 with the theme: “Identifying Challenges in Agricultural Financing: Bridging the Gaps between Financial institutions and Agribusinesses”, which was put together by the NBA-SBL Agriculture Law Committee. The discourse was moderated by the committee’s Secretary and Editor-in-Chief of FarmingFarmersFarms, Dr. Adewale Kupoluyi, and hosted by the section’s Chair, Aderonke Alex-Adedipe, who was represented the Vice-Chair, Joshua Daranijo.

According to the Head, Credit and Marketing Department of NIRSAL Microfinance Bank, Anulika Ijomah, what should be done to change this narrative is to make governments at all levels to give banks soft landing such that loans can be quickly and easily disbursed to farmers and the issue of collateral is resolved. She said that ministries of agriculture should handle extension services and properly train farmers for them to understand agriculture as a business and not seen as mere farming. She said the Nigerian Agricultural Insurance Corporation (NAIC) was set up specifically to provide agricultural risks insurance cover for Nigerian farmers, adding that the government must subsidise farm mechanisation and adequately monitor farmers from the first day of farming up to the last day of harvesting.

Ijomah called for wider conversations between the government and all parties involved in agricultural financing, noting that the required resources had to be provided, and suppliers certified while the issue of insecurity is urgently tackled. She revealed that her bank was ready to assist prospective clients in processing their loans and also do follow-ups after disbursement. She noted that “There is need for wider conversation with government and all parties involved in the agribusiness should be duly informed and there should be proper monitoring of farmers from the first day of production to the point of harvest and subsidise mechanised farming. Our product can align with every phase of agricultural value-chain, but depending on the farmer’s behaviour and they should present their proposal well for them to finance. Lack of knowledge, cost implication and monetary evaluation are some of the issues farmers are facing”.

Ijomah, however, urged fresh starters in agribusiness to understand how the business works, saying they must devote their time for the business because of its delicate nature. They should equally have their markets and be sure of what they want to do. Reeling out some of the problems of funding agricultural businesses, the panelist pointed out insurance coverage, inability of farmers to manage disease, land leasing, inferior quality of input, global warming and inadequate collateral, among others.

On his part, the Field Officer, ETG Beyondbeans, Dr. Olorunfemi Malomo has called for synergy between NIRSAL and the National Orientation Agency (NOA), adding that the agripreneur should be well-informed. He posited that communication was key, adding that available products should be made affordable and accessible to agripreneurs at the grassroots, saying that the product provided by microfinance banks should be insured. “We should get rid of organisation bottlenecks as they affect agricultural production. There is a gap between financial institution and agribusinesses and that many farmers are yet to identify where to get loans or grants. Farmers should be keeping records to make it easy for them to access loans from financial institutions, they should do feasibility studies, engage experts, know the available resources and if you don’t have the full fund for whole farming circle, don’t start at all”, he added.

In summary, Dr. Malomo revealed that Nigerians love too much of imported goods, saying they should rather patronise locally-made goods in order to help the economy, noting that undue organisational bottlenecks should be look into so that loans can be quickly disbursed to farmers with stern warning to prospective agripreneurs to have full funds that would cater for the whole agricultural cycle, saying if funds were not available, they should not even bother to start the business. It is hoped that the suggestions given by the speakers would be accorded necessary attention by those concerned to advance the cause of agriculture and economic transformation of our nation through increased productivity and diversification.

Meanwhile, the Nigerian Bar Association has three professional practice sections, viz: Section on Legal Practice (NBA-SPL), Section on Business Law (NBA-SBL), and Section on Public Interest and Development Law (SPIDEL). These three practice sections are designed to equip NBA members with necessary skills for advancement and exploits in the legal profession. The NBA-SBL was established 20 years ago and has at its apex, a council that is currently chaired by a seasoned lawyer, Dr. Adeoye Adefulu with other members in sector-focused committees, such as the Agriculture Law Committee that were established to cover existing and new areas of law with a view to enhancing commercial law practice in Nigeria.