Kabir Ibrahim is the Managing Director/ Chief Executive Officer of the Bank of Agriculture. In this interview with Olugbenga Adanikin, he shares the vision of the bank and ongoing plans to recapitalize it and the newly created credit facilities designed to support rural farmers and youths interested in agribusiness. Excerpts:
TO what extent have you realized the vision of BOA to be the foremost self-sustaining finance institution in Africa? The processes we have started are tailored towards attaining that vision. First, we are focusing on incremental growth in the database of our customers. In two years, we want to register nothing less than 20 million in our database. Aside, we are working on Information Communication Technology (ICT) infrastructure. Agribusiness is now automated because of the numbers and also the clusters of farmers you have to manage. It cannot be managed manually. We are on that. Central Bank of Nigeria (CBN) that owns 40 per cent of the bank is highly supportive in this regard. We decide that there are other development partners that can also provide us with the needed capacity in IT. Also, we are working on fund sources to power our programmes. Prior to this time, we totally relied on the federal government for funds. We are key player in the facilitation of the Anchor Borrowers Programme (ABP) of the CBN. We are collaborating with the African Development Bank (AfDB), International Fund for Agricultural Development (IFAD), Islamic Development Bank, Rabo Bank just to mention a few, all to see how we can source funding instead of totally relying on federal government. Our ability to also deliver in the expected funding to the farmers is another area. Prior to this time, farmers do come to our offices to seek funding support but going forward, we want to be there for the customers. We are looking at the Agric Bank of Morocco to build our capacity on extension services. We are also diversifying our services beyond smallholder farmers but commercial agriculture such as the agro-allied industry. We are doing a lot to realize that vision. Internally, we are doing a lot to change the mindset of our workers to begin to think that the services we are rendering are not just traditional but to help change farmers orientation that agriculture is also a business. We are a business organization rendering commercial services for profitability and sustainability.
With the various pronouncements by automobile manufacturing companies to phase out petrol and diesel engines between 2019 and 2040, Nigeria, a crude oil reliant country seems destined for serious economic meltdown; do you think agriculture is well positioned to take over as the nation’s export sector?
The issue of revenue from oil export for the economy is something federal government should have thought about long ago by investing in alternative revenue sources and that alternative is agriculture. It is not late but this is the time. At least we have started facing the challenges of dwindling oil revenue due to low prices and production outputs. Agriculture is the only sector that has tremendous opportunities from the farmers to the market. In the whole gamut of value-chain, there are lots of activities that can provide employment opportunities, revenue to government in terms of taxes, revenues in terms of exports and foster economic development. When you grant credit to the farmer, many things go into the credit such as input suppliers. People that supply fertilizers, pesticides, pumps among others. There is an area of processing of raw agriculture commodities which is capable of addressing post-harvest losses. The losses are revenue which would have accrued to the government but because we lack processing infrastructure, all those went as waste. So by the time we start investment by lending money to develop processing aspect of agriculture, you have provided more employment and opportunities for those who want to add extra value to our agriculture. Beyond that, there is transportation. Railway for instance, you can see that the traffic is very high, talk less of moving agricultural produce from one part of the country to another. In Benue State, there is a major roundabout where if you stand there from 6am to 9am, you will see the number of trucks that come out of Zakibiam among other locations transporting yam, fruits to the South, North and other places. By the time you go there to ask the number of trailers that move out daily, you realize that you need to book ahead for their services. At times, you have to wait for two weeks to get the exact truck that will move your commodities from one location to another. That is another opportunity and it’s lucrative. In the area of marketing, there are people, who essentially identify markets for clients both locally and internationally for agricultural produce, there is abundant opportunities there before the exact market where commercial activities take place. Like I said, the value chains in agriculture are endless and the opportunities are there. Once we are able to focus on them, rightly invest in the value-chains, believe me sincerely we are out of the woods because most of the advanced countries largely rely on agriculture than oil.
The federal government has repeatedly disclosed plans to recapitalize the BOA. What will you say is responsible for the delay and how much is considered suitable for the recapitalization?
When you talk of capital needs of any organization, it will depend on the challenges at hand. The operational challenges that must be addressed before you can become responsive and it will also depend on your work plan and what you intend to achieve within a timeframe. So when you put together all those things in totality, you come up with a budget but in agriculture, it will be difficult to know exactly this is the cost needed. From our forecast, in the next five years, we require N600 billion to start with. It will enable us recapitalize the bank. That will enable us to improve on the IT infrastructure. Like I told you, the driving force in agriculture is now IT. Once you don’t have IT, you are not there. Farmers don’t have to come to the bank to apply because cooperatives do applications for them. Customers do not need to visit the bank for loan repayment. They can do that through the phone. They have what is called an e-wallet. So everything is simplified that the moment you tap on the data of a particular farmer, you will be able to see the account number, picture, address, farm coordinates as well as the various stages of farming activities in that area. You can as well monitor the account on how much is disbursed, the amount utilized and the outstanding. So you will be able to see the credit history and so many things about the farmer that will make it easier for you, even if your eyes are closed to grant a credit facility. Mobility is also important because you need to be moving to nooks and crannies of various farmlands. The extension workers cannot do it alone. Recently, we bought over 200 motorcycles to extension workers to meet-up with farmers in the rural villages. All these things require money. Even the development partners we are trying to approach will rely on our books and financials. If our financials show that the bank is under-capitalized, there won’t be any attraction so also if the bank is not well funded including numbers of registered farmers, if they are not many, they may not be attracted. If the non-performing loans ratio is high, they will not be attracted. So a lot of these things have to do with funding. Once we are able to do these, the sky is the limit and there won’t be any problem.
What programmes does Bank of Agric have on ground towards getting Nigeria back on track as an agriculture export country?
What we have done essentially is to introduce hybrid quality seeds for cash crops for farmers to have better capacity in terms of yields, identifying foreign markets for those crops and providing the funding that will enable us to meet the world standard. For instance, there are some preferred crops in Nigeria compared to others but because the standard is low in terms of grading such as cotton. Cotton has different grades. If a buyer says he wanted a particular grade and you lack the capacity to produce that grade, it becomes a problem. If you now export with different grades put together, certainly the contract will not be honoured and that applies to other crops as well. Beside that we are also packaging training programmes for the farmers so that they can learn from other successful countries. In some cases, we facilitate some of the farmers unions through their cooperatives to go abroad in areas where they have recorded successes in different types of farming. For instance, the crisis between the herdsmen and farmers causing so much problems for the country is something simple. We are currently in the process of facilitating pastoralists to travel to South Africa and Canada on a study tour to see how the countries have harnessed opportunities in agriculture. Some will go in the month of September while that of South Africa will follow suit. We have received quiet a number of people who are interested in the workshop and we are currently processing their visas, by September we will take-off together with them. This is important because if you look at cattle rearing in Nigeria, how much milk does a cattle produce? There, their cattle are ranched in one location. They are paired and taken care of in one location. The milk yield is unprecedented. The meat is extremely good and the skin you will get has market all over so you can see, they are big opportunities. There is need to change the parochial thinking that for one to rear cattle, you have to move about. You know it is archaic because the world is now advanced. There is need for local investors to be serious about the issue rather than talking rhetoric. Pass a law here and there. If you prevent, what alternative do you have in place, nothing so cattle rearing has a big opportunity in agribusiness that people have so much money and I think it is good for state governments to start collaborating with us. We have experienced people that can help in the products we have developed overtime to establish these cattle ranches in different locations across the country. We can even improve the living standards of the herdsmen instead of them, roaming around not attending schools, losing out among others, you can have them in one location and provide every amenity required such as education. I read recently that the current minister of education in France was a cattle herder 25 years ago in Morocco but because of their mechanized farming method, she was able to go to school and today, she is a minister. That is the dream we have to revolutionalise the country completely.
Nigeria was a major exporter of cocoa, cotton, groundnut and the likes but we relinquished our position as leading exporter. What can we do to reclaim this position?
All these issues revolve around money. How much do I make from a business? If you remember, Nigerians are good at copying. When the era of filling stations started, people were making good money and you find filling stations all over the place. When the era of transportation started, there was a boom and everyone wanted to start business. This is the era of agriculture. We are talking about sufficiency in food production, how to increase government earnings through export among others. Now that I have listed those opportunities in export, what we are doing is to create market for the various crops. Once we do that, we enter into various agreements and next is funding. Most of the countries that need these crops are always pledging to fund research ventures. Once we have those two together, the next thing is to see how we can improve on the seeds, i.e quality of seeds that can give better yields and harvests. Once we achieve that, we can come out with ways to process, package and meet international standard markets that require research from us. You know, what is killing the sector is the interest rate. If we get funding below five per cent, then we can continuously lend at below nine per cent, making a spread between five and seven per cent on any deal. Once finance is there, access to finance is easy and all the inputs required are there and we monitored and ensure that the funds are invested in agriculture, we will regain our former place and even exceed expectations.
There have been a lot of efforts on rice, with pronouncements on self sustenance, and even export as early as next year, how feasible is this?
The Anchor Borrowers Programme (ABP) is a national scheme that covers all crops across the country. What happened on rice was just a pilot scheme because rice is the most staple food that every Nigerian wants. It is because of that I think CBN started with rice but we are replicating it on other crops such as cocoa, palm oil, gum Arabic, soya, palm oil and the rest and we are collaborating with state governments to key into the programme and then we take-off.
Just last week, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh met with Vice Chancellors of Agric Universities and instructed that the graduates must have farms to become potential professional farmers. Do you have credit window for this large group of youths?
We have products that are targeted at women and youths to empower them in agriculture. If you remember, in the olden days, every primary and secondary school have a farmland likewise the universities and National Youth Service Corps members. That was referred to as community development. Mostly, youths engaged in farming activities, a week in every month during the service year. All those values have gradually eroded. It is now that the ministry is going through the federal universities of agriculture to revive that effort so that people can appreciate agriculture from the formative stage of life up to adulthood. It is something that we as a bank will like to support and there is credit access for that.
Are you sure there won’t be stringent repayment measures and collaterals before they can access the credit?
Let me tell you, credit in banking has nothing to do with collaterals. Collateral actually is the last issue. It is when integrity is compromised, when people are not honest and the legal framework is such that when people default in credit relationships and they are not sanctioned, that is when you talk about collaterals. So when the worst comes to the worst, I have something to rely on. As much as possible in the ABP, there is nothing called collateral. Most importantly, we want to identify the farmland, map the farmland, and get the coordinate of the farmland. What is important is that the facility the farmers have taken is invested in the land.
What is the current percentage of Nigeria’s budget for agriculture and do you think this can take us to the promise land?
I don’t think so, but I feel it is something gradual. It is just like farming. When you are entering newly, you have to start small, just like a pilot project. When you do the first, you will be confronted with challenges and identify the problems. In the second stage is when you increase resources, identify the size of land you want to cover and even increase the number of crops you plant and so on. Maybe it is just a starting point but we need to do more. Agriculture, like I told you, the opportunities in the value-chains are endless. You cannot be talking about billions but trillions of Naira to finance the sector. What is important is that once the money is invested, what is the impact of that money on the society? The Gross Domestic Product (GDP) and the employment created and so on and so forth. By the time you do that, because these are social problems that are embedded within the society. So instead of investing so much in abstract activity, once you do it in agriculture, you can easily see the impact in the society. Youth restiveness will reduce, all these agitations will reduce.
Do you have a figure/percentage of agric export’s contribution to the nation’s GDP?
If you take agric as it were, you will know that its contribution is more than 20 per cent compared to others but wait until end of this year. You will see a remarkable improvement. Like I told you, in the first year of the ABP, the statistics are there. By the time we go into the second year, we have already started preparing for the dry season, once that is done, by the end of the year, you will see the remarkable growth in the GDP and other economic indicators.
What are your words of advice for youths who might be interested in agriculture?
Well, the youths unfortunately want to enjoy without making any efforts. They don’t understand life does not go that way. Life is about determining what you want to be, creating that vision as an individual and making efforts towards attaining that vision. My advice is for them to embrace farming as an occupation. Recently, I spoke with a group of youths from the South-south and they told me, a number of senior colleagues that graduated before them, for four years, they were not doing anything, waiting for office jobs in oil companies or federal government works and nothing was forthcoming. They now decided that they should go into aquaculture and with support of their various state governors within the region, we were able to empower them. We train them on fishing. The state government provided lands. After the training, they took over and started on their own. Some of them will tell you that from their very first year of operation, they realized that if given further support, they will never think about white collar jobs.
