Top challenges affecting small agribusinesses growth in Nigeria

Small agribusinesses have the potential of growing into large enterprises if some challenges confronting them are tackled.
Experts have observed that by their nature, small agribusinesses are vulnerable to shocks emanating from government policies, market fluctuations and climate change.
Due to the shocks and obvious lack of incubators for their survival, some of them fold up without making the desired impact on the economy.
The shocks confronting small agribusinesses in the country are blamed for Nigeria’s seemingly unending food insecurity issue.
A survey conducted on quality of life in Nigeria by Philips Consulting Limited published in April this year indicated that 55 percent of Nigerians are still dissatisfied with the level of food security in Nigeria.
The report revealed that 56 per cent of Nigerians who participated in the survey indicated that low income contributed to food insecurity while 50 per cent blamed poor use of technological advancements to boost crop production for the problem.
Daily Trust’s analysis of submissions made by panellists at the day two plenary session of the 1 st Daily Trust Agric Conference and Exhibition held in Abuja recently revealed top challenges retarding the growth of small agribusinesses in Nigeria.
The plenary with the theme ‘Helping Small Agric Businesses Grow into Large Enterprises,’ was chaired by the Chairman of Nagari Integrated Dairy Farms, Senator Abdullahi Adamu.
Over the years, successive governments in Nigeria formulated and implemented wrong policies that impacted negatively on small agribusinesses and culminated in retarding their growths due to lack of a recognised agricultural road map, they said.
The panellists posited that such wrong policies, worsened by policy somersaults and inconsistencies in implementation, had not only led to the underdevelopment of the agric sector of the economy but also robbed the country of the employment generation and rural development potentials of the sector.
Senator Adamu observed that the problem with Nigeria’s economy is that agricultural pursuit lacks political leadership to drive the country towards more recognised road map for the attainment of agricultural self-sufficiency in food.”
Giving insight on some wrong policies that underdeveloped small agribusinesses in Nigeria over the years due to lack of a road map, the senator lamented that the past administration led by President Goodluck Jonathan implemented a policy that promoted agriculture as a business while sidelining agriculture as a development tool.
“This is a wrong policy philosophy of agriculture to say the least because if agriculture connotes only the business and not the development sector, what happens to the teeming population of small-scale farmers in this country and constitute not less than 75 per cent of the population of Nigeria,” he said.
He said the past administration separated agriculture as a culture of the people from agriculture as a business and chose to emphasise agriculture as a business without enabling environment to make it a business for those who are involved in it through development initiatives.
One challenge that has also retarded the growth of small agribusinesses from growing into large enterprises has been the refusal of the federal government to implement recommendations from conferences, experts and stakeholders in the sector over the years.
“We have innumerable conferences, innumerable recommendations and they have piled dust, dust in the various archives and various shelves of the Ministry of Agriculture,” Senator Adamu lamented.
On recommendations gathering dust on government’s archives, it can be recalled that the 19th Nigerian Economic Summit held two years ago focused on ‘Growing Agriculture as a Business to Diversify Nigeria’s Economy.’
One wonders what happened to the recommendations of that summit that were submitted to the federal government on how to diversify the economy through agribusiness.
As a way out of low income agriculture, the summit recommended the reservation of portion of state agricultural funding for Nagropreneurs and women, tapping capital markets for long-term funding and securitising agricultural risks.
The summit also recommended the standardisation of lending approval process to seed companies, expansion of the size of the Commercial Agriculture Credit Scheme and making it a revolving fund, provision of innovative long-term financing, development of cost effective agro-specific insurance products and encouragement of access to funding from banks through women co-operatives.
The summit further recommended that the Federal Ministry of Agriculture and Rural Development be renamed Federal Ministry of Agriculture and Agribusiness as well as the expansion of the capacity of the Securities and Exchange Commission (SEC) to regulate commodities exchanges.
In addition, the summit recommended the establishment of Staple Processing Zones close to the farms to reduce the need for long distance transportation.
Those recommendations have not been implemented and so has been the fate of various, innumerable conferences and summits held in the past to chart a course for the development of agribusiness in Nigeria.
Speaking on challenges faced by small agribusiness owners in the country, the Managing Director of the Nigeria Commodity Exchange (NCX), Zaheera Baba-Ari, harped on the problem of heavy post-harvest losses suffered by farmers.
The NCX, which was established to fill the void created by the abolition of the commodity boards that ceased to exist in the 1980s, is meant to solve the problem of heavy post-harvest losses associated with poor warehousing and absence of a ready market for disposal of farmers’ agricultural produce at realistic prices.
It was meant to stimulate productivity and act as a stimulus for the production of surplus commodities to enable farmers and farmers’ co-operatives to forward their commodities for trading on the exchange.
However, the available warehouses in the country, in terms of quantity and location, cannot serve millions of farmers located in remote communities across the country.
In terms of access to finance, farmers receive receipts for their stored commodities warehoused in the exchange, to secure credits from banks as their commodities serve as collateral.
Baba-Ari, however lamented that banks are not willing to give loans to farmers and this has limited the extent to which the exchange can give farmers access to financing.
“The scheme has been unable to go far in providing farmers and other commodity stakeholders access to commodity-backed financing due to the unwillingness and refusal of the commercial banks that have indicated interest in being part of this initiative to agree to finance the scheme at a single interest rate,” she revealed.
She recommended that what small agribusinesses require to transit to large enterprises in Nigeria are effective linkage to market, legal and regulatory framework, access to finance at reasonable interest rate and good managerial skills.
“To do this, however, government has to come up with strong policies that promote trading and incentives for trading on the exchange,” she recommended.
The Managing Director and Chief Executive Officer of Unity Bank PLC, MrsTomiSomefun, said Nigeria needs to come up with better policies and procedures to make the country’s agricultural potentials to manifest.
Somefun, who was represented at the panel by the Head, Agric Business of the bank, decried that 70 per cent of farmers are into it at subsistence level.
She told participants at the conference that it is difficult to finance some of the farmers because they are largely unorganised.
The bank MD/CEO also lamented that land tenure system is a big problem in Nigeria and for farmers to access credit from commercial banks, value for the credit must be guaranteed through collateral.
She recommended that a policy should be put in place to enable farmers get certificates for their lands which they can use to secure loans from commercial banks.

Source: DailyTrust