At the launch of the locally produced MITROS Rice in Ogun State recently, the federal government unveiled its plan to make credit facilities available to farmers at 5% interest rate to facilitate food processing towards enhancing food production. The proposed loan initiative is in furtherance of the economic diversification drive for which the federal and state governments have been demonstrating commitments. When actualised, it is expected that the credit facilities would stimulate investments in food processing, create jobs and boost Nigeria’s Gross Domestic Product (GDP) through increased agricultural activities.
It is in realisation of the need to mobilise adequate resources to aid farmers and SMIs that the recent decision of the federal government to make available loans for local processing of agricultural produce is commendable. It is however anticipated that the new initiative would rely on definite baseline information as well as requisite modalities that will ensure proper disbursement of the loans to make the much-needed direct impact on the agricultural sector as well as the broader spectrum of the Nigerian economy. It is important that disbursement of resources to trigger processing of agricultural produce should take into consideration template for multi-crop processing model of Staple Crop Processing Zones (SCPZs) to conveniently explore opportunities in high agricultural production areas through proximity of clustered agro-processors. However a careful strategic plan is required to maximise comparative advantage in the processing of agricultural produce to meet domestic demands as well as requirements for exports.
But there is the need to avoid the pitfalls of the past. It would be recalled that prior to the recent disclosure by the federal government to further support farmers with loans to encourage food processing, the Bank of Industry (BOI) had in 2014 introduced a similar scheme tagged the Cottage Agro-Processing (CAP) Fund. The CAP initiative was to be implemented under a N5 billion revolving funds that targeted at financing about 1,000 projects. Low-technology; labour-intensive agro-processing Small and Medium Industries (SMIs) were to be targetted under the CAP initiative.
Beneficial SMIs were expected to deploy CAP fund into processing harvests for consumption as well as into raw materials for allied industries to complement existing opportunities facilitated by Staple Crop Processing Zones (SCPZs) Bio Agriculture processing Fund. It is also instructive to note that disbursement of CAP fund was expected to substantially mitigate risks and uncertainties.
It is nevertheless lamentable that huge sums of money so far pumped into developing the processing component of the agricultural sector has not been judiciously utilised as there is not much on ground to show for the anticipated impact. In 2013 for instance, the Federal Ministry of Agriculture and Rural Development (FMARD) collaborated with the United Nations Industrial Development Organisation (UNIDO) to mapped out and established 14 SCPZs in the six geo-political zones of the country.
Spearheaded by FMARD, the project was projected to gulp $1,063.1 billion to cover the provision of infrastructure such as railway, roads, ports, water supply as well as improvement in power supply. Private investors engaged as partners in the 14 SCPZs initiative include Dangote Group, Nigeria Flour Mills and Cargill USA while relevant Ministries, Departments and Agencies (MDAs) were assigned roles for the successful take-off and operation to be coordinated by an inter-ministerial committee.
Whereas the SCPZs project had attracted USD 350 million worth of investment from various financial institutions for the specific purpose of developing infrastructure as well as developing the capacities to sustain critical institutions and stakeholders towards successful implementation, it is regrettable that the initiative has failed to materialise. It is therefore unacceptable that the initial zeal and momentum that berthed the SCPZs project has been jettisoned; and if not abandoned in spite of its laudable prospects of catalysing the nation’s agricultural transformation agenda.
Although it would appear the federal government is revisiting the SCPZs initiative, the foot dragging is rather inexcusable. We therefore urge that SCPZs implementation should be expedited since it has greater capacity to create jobs and generate income for a large number of unemployed youths.
Read more https://independent.ng/five-percent-interest-rate-loan-agric-produce-processing/
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