In Nigeria, some of the people who will feel the effects the most are those living in rural communities, particularly farmers relying on external funding to grow and support their farms. Like much of Sub-Saharan Africa, smallholder farmers make up as much as 80 per cent of Nigerian farmers and they produce between 70 to 80 per cent of the food we consume. The restrictions in movement, widespread lockdowns, and slowdown in trade is likely to have impacted their livelihoods, directly or indirectly. Yet, even before the global pandemic, the smallholder farmer has struggled from the impacts of climate change and resource constraints exacerbated by severe challenges in accessing finance.
At Thrive Agric, our contribution to ensuring that Nigeria is food sufficient has always meant that we prioritized the farmer. Now more than ever, at a time where the Food and Agriculture Organisation (FAO) has warned of a looming food crisis, a farmer-centric approach must dominate our response to this challenge. Many of these farmers have inherited their livelihoods from their fathers and have not been able to expand production beyond what their fathers had. One critical challenge lies in their inability to secure funding from financial institutions usually because they are financially illiterate and most financial institutions have interest rates too steep for them. On average, only 3 per cent of smallholder farmers have access to credit, for the rest accessing credit is near impossible. I’m reminded of my first trip to a farming community in Zaria. It was there I met Suraju, a very calm but jovial maize farmer who told us that he had inherited all he knew about farming, including the farm, from his father.
Out of curiosity, my team members and I asked him whether his farm had changed much in the last 15 years. To our surprise, he responded saying, “Not much has changed, I have been cultivating less than one hectare of land but my desire is to cultivate at least two or three hectares and start growing rice and groundnut as well.” Today, Suraju is one of our superstar farmers. His ambition is second to none yet, before Thrive Agric, that ambition was stifled primarily due to inadequate financing. For smallholder farmers like Suraju, access to finance, improved technology, and input is all they need to increase their economic portfolio. For them, every crop yield literally signifies the difference between barely getting by and building economic value for themselves and their family. Amidst the FAO’s precautionary tale of a looming crisis, providing support for these very farmers may be Nigeria’s only way out.
Yet, the current state of the economy and the predicted downturn has meant that many financial institutions are less inclined to lend money to farmers at this time. Besides this, the fact that banks use one-size-fits-all risk assessment frameworks greatly undermines the importance of farmers and agriculture to the fabric of society and the economy. Simply put: if farmers cannot access credit to support their farms, we risk amplifying the already fragile food security levels in the country. And, we also risk a precarious situation for millions of underserved Nigerians.
Then there is the impact on these farmers – if they lose their primary source of income, they will be plunged into poverty. This does not have to be the case, an intervention is imperative, in order to prevent a food crisis and enhance farmer’s ability to contribute to food security. One way the government can support farmers is by buying surplus food and contributing to current social palliative measures across the country. At this time, collaboration is crucial. Food banks can collaborate with agricultural companies to ensure that they have resources for their food programs which will provide farmers guaranteed buyers for their yield.
More importantly, however, there is a fundamental need for the Nigerian government to incentivize the agricultural sector, this needs to take shape in the form of government policy that encourages private sector loans. In the U.S., banks are mandated to give loans to farmers at a negative percentage, these sorts of forward-thinking policies can provide the necessary support for smallholder farmers. In 2015, President Muhammadu Buhari launched the Anchor Borrowers Programme which was established by the CBN. The programme is meant to serve as a link between anchor companies and smallholder farmers, providing cash or kind inputs to boost production. While the policy itself is a step in the right direction, with over 1.5 million farmers benefiting from it, non-repayment of loans has been a major challenge. Good policy is one thing but in order to ensure that the ABP achieves its intended impact in securing easier access to finance then, it is essential that access to credit is tailored and combined with the necessary capacity building and checks and balances required to ensure that it has the desired impact.
The situation is not entirely dire, and as usual, it seems that technology has the ability to save the day. Beyond access to credit, optimising digital technologies to sell their products and using direct-sell delivery systems is a way farmers can evolve and cut out the middle man during this pandemic. There are several examples where this is the case; in Norway, farmers are using online platforms to sell their food and in the U.S. and Germany, farmers are selling directly to customers through apps and online platforms. This narrative has been the case in many other African countries but it has to expand more, especially at these critical times. Although we do not yet have all the infrastructure and capacity to do this on a wide scale, especially as mobile phones and internet penetration can be better, we can still leverage technology to bridge some of our recurrent challenges – many of which are exacerbated by COVID-19.
We can no longer rely on oil revenues. The good thing, however, is that oil is not all we have; agriculture provides a sustainable alternative. We have over 82 million hectares of arable land and a dynamic, agile labour force that needs support from its government and other key stakeholders within the private sector – especially those who have the influence to move the dial as it relates to the difficulty accessing credit and other financial products and services. Now more than ever is the time to reorient the national consciousness towards agriculture and leverage technology as a means to provide the financial and supply chain services necessary to bolster our food security and the livelihoods of our smallholder farmers amidst and beyond the ongoing pandemic.
Uka Eje is the CEO of Thrive Agric, a technology-driven agricultural company passionate about ensuring global food security.
