EFFECT OF COVID-19 ON THE AGRICULTURAL SECTOR IN NIGERIA

August 14, 2020

Agric DigestNewsTrending

INTRODUCTION:

Since the World Health Organization (WHO) first declared Covid-19 a world health emergency in January 2020, the virus has been detected in over 213 countries. Globally as of 13th August 2020, over 20,810,774 people have been affected with 747,327 death cases. Nigeria is not left alone from this raging pandemic. Ever since the first case discovered on February 27, the country has now recorded as on 9th April, 47,743 cases of infection with 956 deaths speared across 36 states and the Federal Capital Territory. As the COVID-19 pandemic takes hold in Nigeria, the governments have begun to tighten borders, restrict large gatherings, and close schools. The crisis has already fundamentally changed people’s lives not just with regards to public health but in terms of politics, the economy, public services, and much more.

Most areas in the country experience isolated cases or small cluster outbreaks, but with carefully managed restrictions, there is no widespread outbreak, and most economic impacts are driven through global knock-on effects on trade and travel Significant outbreaks which have led to a significant economic downturn through reduced consumption, and knock-on effects on trade with state and interstates and travel bans. In this period of the pandemic, quick responses have been taken by the government, Central Bank of Nigeria, several private and individual led organizations.

Sterling Bank more so hasn’t slacked on this which among other things has developed new Agric products through the Agric Finance and Solid Mineral team to help cushion agribusiness and players along the value chain despite the pandemic challenges. The advent of COVID-19 has spurred the bank into action to create effective ways to ease the impact of the virus on the businesses of our customers. In a way to curb this effect, the bank has been developing several products in the following categories;

Production segment:

  1. SWAY –Ag product:

According to the Federal Ministry of Agriculture and rural development, 70% of the population involved in agriculture are women. This is a product program targeted at women and youths in the Agricultural value chain. This product caters to all activities within the Agric. value chain, from input distribution to production, processing, sales, and distribution. The facility can run for a maximum of 2years and equity contribution is between.  5% -10%. The interest rate is at a single digit of 9%. For Smallholder farmers, the maximum amount that can be accessed is N250,000, while for retail, SME businesses and Farmer’s group is N5million, N20million, and N250million respectively.

  1. Broiler product financing:

Poultry contributes over 25% to the nation’s GDP and accounts for one of the major exportable produce highly demanded in the international market. However, due to its high level of risk and unstructured nature of the business which is largely practiced in small scale, the business often lacks enough fund and thus are not scaled many times. Considering this, the bank is developing a broiler financing model targeted at providing adequate funds to small-scaled broiler producing businesses. This is to enhance the production and upscaling of the business model.

  1. Small household farmer’s product financing:

Small household farmers account for over 70% of farmers in Nigeria and contribute over 60% of the food we consumed. However, such businesses are challenged with financing and don’t often have access to enough funding due to the unstructured nature of their business models. In solving this, the bank has developed a simple model structure with a creditworthy system to avail loans to farmers.

This was designed to facilitate access to finance for smallholder farmers (SHF) (linked to Anchor Companies that have robust Digital Agric. Platform) for the production (cultivation) of crops such as rice, maize, sorghum, soya beans, and other arable crops. There are two variants to this product paper. The first variant focuses on extending credit to smallholder farmers linked to anchor digital companies while the second variant focuses on extending credit directly to farmers in cooperatives /groups with little or no digital capabilities

  1. Fertilizer product financing:

One major input farmers find challenges that contribute to over 150% to crop yield is fertilizer. Fertilizer as a viable input more so has created over time for itself a huge market business. To making the business more attractive and solving the input problem of most farmers, this product was designed and developed for super agro-dealers.  This is to aid the purchase of fertilizer by agro-dealers from fertilizer blending companies.

Downstream/ Marketing

SABEX platform:

One of the key major problems faced by businesses especially agribusiness is access to the market and this has made some of these businesses not be able to scale over time. Access to the market is recognized as a determining factor that enhances the success of a business. Here in sterling, we have built a blockchain trading platform called SABEX to enhance seamless trading of agro commodities across the country. This platform is built on a blockchain technology that allows trading transactions on the platform to be traceable and enable parties trading to be able to trace their commodities per time. The bank has rolled out the SABEX platform to aid listing, purchases, and access to loans to buy and sell agro commodities such as fertilizer, dry grains, etc.

 

Conclusion:

The raging Covid-19 pandemic is a new strain of Coronavirus that has to a large extent affected the economy of the country. However, a way to mitigating this is by a collaborative effort of the varying institutions; government, public and private institutions to creating workable solutions to solve the problem. Sterling bank is willing to go all the way in providing innovative solutions in fighting the raging pandemic, enhancing the businesses of stakeholders in agric. value chain and we hope to be your one customer bank as you scale the storm of Covid-19.

Please follow and like us: