7. Presentation to Joe Smith7
Engages 70% of
Labor force
AGRICULTURE IN NIGERIA
Farming is often of
Subsistence variety,
Characterized by
Simple tools and
Shifting cultivation
70%
arable
land (48%
being
cultivated)
Contributes 40%
to GDP
9. Presentation to Joe Smith9
Majority of he agriculture-
focused operations are small
scale with limited
innovation
regarding
inputs,
harvesting,
processing,
distribution, and
access to
markets.
MAJOR CHALLENGES
10. Presentation to Joe Smith10
The vast
majorities of
people who
engage in
agriculture
operates at
the
subsistence
level, are
uneducated and
have limited
access to
training
11. Presentation to Joe Smith11
95% of the
country’s
exports are
dominated by
petroleum and
related
products, which
has shifted
focus away
from
agriculture. As
a result, until
recently, there
has been
severe
underinvestmen
t in agriculture
12. Presentation to Joe Smith1212
Any nation that wants to develop
must look inwards to identify areas
where it has
Comparative advantage over other
nations and seek to develop identified
areas.
13. Presentation to Joe Smith13
Agricultura
l
Production,
a key to
unlocking
financial
opportunitie
s in Nigeria
14. Presentation to Joe Smith14
Various opportunities abound for small and medium and
large scale enterprise in sustainable agriculture and
industrial farming to unlock financial opportunities in
Nigeria.
These opportunities would be analyzed under the
following:
16. Presentation to Joe Smith16
A number of incentives have been used to
encourage investment in agriculture. Some
include:
Finance Credit
Export Financing &
Guarantee
Tax Holdings
Agricultural Insurance
scheme
Reduced customs
charges on imported inputs
Technical support
through research
institutions &
Extension
services
17. Presentation to Joe Smith17
Access to finance is critical
for the growth of the
agricultural sector. The
shift from subsistence to
commercial agriculture
production requires funds.
However, in developing
countries, where agriculture
is a source of livelihood for
86% of rural people
(IFC,2013), financing for
18. Presentation to Joe Smith18
CHALLENGES OF AGRICULTURAL
FINANCING IN NIGERIA
The risk factors inherent in agriculture often inhibit
financial institutions from lending.( production
hazard risks, low ability to provide collateral etc)
Financial sector may not be sophisticated enough.
The ability and innovation on sector-specific financial
Instruments and services is usually poor
Lorem ipsum
nsaction cost in rural areas are higher than in urban
as due to more dispersed population and weak infrastructure
Lack of records and statistics on farming in developing countries m
assessment of credit sustainability challenges for financial pro
Lorem ipsum
20. Presentation to Joe Smith20
WHO FINANCES
AGRICULTURE
The diverse system of agriculture finance enables a
wide variety of actors to be financers. Different
risks are covered by different actors.
FARMERS
AND SMALL
ENTREPRE
NEURS
. Act
mainly
within
the
informal
sector.
COOPERA
TIVE AND
CREDIT
UNIONS
. Have
non-
profit
status
PRIVATE
SECTOR
FINANCE
•Local
commerci
al banks
•Branche
s of
foreign
banks
•Insuran
ce
companie
s
DEVELOP
MENT
BANKS
•FILLING
FINANCIAL
GAPS IN
DEVELOPING
COUNTRIES
•FINANCING
SPECIFIC
PUBLIC SECTOR
PROGRAMS
21. Presentation to Joe Smith21
FINANCIAL INSTRUMENTS THAT
CAN UNLOCK OPPORTUNITIES
DIRECT FINANCE
DIRECT FINANCE
Financing a particular actor of the agricultural
sector is a traditional nway to financing in
developing countries like Nigeria. These include
not only farmers but other actors, such as
input suppliers, traders and exporters.
22. Presentation to Joe Smith22
FINANCIAL INSTRUMENTS THAT
CAN UNLOCK OPPORTUNITIES
DIRECT FINANCE
The type of financing above, can be combined in
different ways in the same project with
participation of different actors to unlock
other financial opportunities
23. Presentation to Joe Smith23
The focus of financing here, is on the business
transaction between two or more participants of
the chain rather direct financing of the farmer
or entrepreneur. This is done to reduce cost and
risk, increase efficiency and improve the credit
profile of the actors in the chain.
VALUE CHAIN FINANCE
24. Presentation to Joe Smith2424
INFRASTRUCTURE FINANCE
A well functioning agricultural sector needs
appropriate infrastructure such as; road
networks, irrigation technology, storage
facilities, telecommunications, water supply and
energy among others. However, rural finance is
underfinanced all over the world. Large scale
infrastructure is particularly in need of
investment.
25. Presentation to Joe Smith2525
FINANCING FOR R & D
R& D has resulted in numerous innovations for
agriculture. Most of this is done by public
financing, however it shouldn’t be constrained to
this., given the interest of the private and
financial sector in its results. Development
banks have also financed R& D. For example, the
World Bank has a track record of financing
operating costs and capital investments of R&D
in sub-Saharan Africa.
26. Presentation to Joe Smith26
IDA FOR AGRICULTURE
IN NIGERIA
The World Bank
recently
approved a
$200 million
credit to
support the
Nigerian
Agricultural
sector,
especially
small and
medium scale
farmers.
It has been
designed to
tackle the key
constraints of
27. Presentation to Joe Smith27
IDA FOR AGRICULTURE
IN NIGERIA
FADAMA PROJECT
Since 1993, the
World Bank
funded-
National
Fadama
Development
Project has
been
supporting
Nigeria’s
farmers by
helping to
empower
communities and
strengthen
agriculture
development in
states
28. Presentation to Joe Smith28
ROLE OF GOVERNMENT IN
FINANCING AGRICULTURE
The public sector is responsible for creating an enabling
environment for agriculture to thrive. It also needs to
invest in addressing the key issues that currently hinder
the sector by reinforcing trade policies and land tenure
policies.
30. Presentation to Joe Smith30
ROLE OF GOVERNMENT IN
REGULATING FINANCE
Policies to improve and attract agricultural finance
come from different ministries, including agriculture,
finance and economy.
The regulatory framework
overning the financial sector
is in two folds;
Regulation should control abuses by
financial institutions
such as offering unduly high rates
or taking excessive
Risks with people’s savings
or investors.
Providing openness and flexibility to offer
The financial instruments needed
for rural sector
31. Presentation to Joe Smith31
The sector presents
tremendous
opportunities for
the emergence
of small and
medium- sized
enterprises
Private sector & Agricultural
Finance Agriculture needs
to be recognized as a key
business sector in Nigeria,
and like other sectors,
requires the engagement of
the organized private
sector across critical
value chains
enterprises which
can create value
and jobs across
critical value
chains
provide financing,
support systems—
including
equipment,
processing,
transportation,
distribution and
marketing
support.
32. Presentation to Joe Smith32
PUBLIC AND PRIVATE
SECTOR PARTNERSHIPEnhancement
of Public-
Private
Partnerships
and
Investment
Financing for
Nigeria’s
Agriculture
and call on
stakeholders
to establish
and
strengthen
inclusive
public-
private
partnerships
for at least
key priority
agricultural
commodity
value chains
33. Presentation to Joe Smith33
PUBLIC AND PRIVATE
SECTOR PARTNERSHIP
partners,
national
governments
including the
International
Development
partners
to take
advantage of
public private
sector
partnership
strategy to
work
more closely
in this
compelling
drive of
transforming
Africa’s
agricultural
and
agribusiness
landscape,
where Africa’s
rising is
anchored
34. Presentation to Joe Smith34
Expanding entrepreneurship of groups of women and young people
, • Enhance preservation of nutrient quality of grains, cereals, fish, poultry, meat, vegetables
• Leveraging ICTs to improve risk management through effective and efficient market linkages throughout national, regional,
continental and international value-chains
• Enhancing science, research, innovation and technology – in particular technologies that improve productivity
of the smallholder women farmers,
Moving forward Agriculture transformation will
require all of us to enhance our investments and
actions in:
