An Examination of the Impact of the Anchor Borrowers Programme on Agricultural Commodities in Birnin Kebbi, Kebbi State
| PAGES = 54 | CHAPTERS = 1 – 5 |
An Examination of the Impact of the Anchor Borrowers Programme on Agricultural Commodities in Birnin Kebbi, Kebbi State
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The agricultural sector presents a vast array of opportunities, drawing considerable interest from both stakeholders and government entities worldwide. In Nigeria, the government has come to realize that a reduction in the consumption of domestically produced crops can have several adverse effects on the nation’s economy. These repercussions include a decline in national revenue, an increase in unemployment rates, rising inflation, a decrease in foreign reserves, growing inventories of unsold produce, the entry of low-quality crops into the market, price discrimination, and challenges associated with rural-to-urban migration. Additionally, there is the issue of decreased productivity, which all contribute to a deteriorating economic environment (Ade, 2018).
Historically, to counteract these economic challenges, the Nigerian government has enforced an embargo on the importation of certain agricultural products. This includes restrictions on the import of foreign rice, dairy products, tomatoes, and other similar goods through land borders. Such measures are intended to control and limit the influx of these items into the country (CBN, 2017). In scenarios where food shortages are prevalent, demand often exceeds supply, which can drive up prices as consumers compete for limited resources. This heightened competition can lead to increased domestic food costs, which disproportionately affect lower-income households that allocate a substantial portion of their income to food expenditures. In Nigeria, where a significant fraction of household spending is devoted to food, any rise in prices can severely impact the availability of food and the ability to afford other essential goods and services (Saheed, 2019). Variations in domestic food prices contribute to economic instability and can deter investment.
One of the primary reasons for the low productivity challenges faced by Nigerian farmers is attributed to limited access to agricultural credit. Many farmers in rural areas engage in subsistence farming and lack the necessary capital to operate, expand, or adopt modern agricultural practices and technologies, such as mechanized farming equipment including plows, tractors, and other labor-saving devices. Consequently, these farmers are unable to produce sufficient quantities of food to meet the demands of Nigeria’s growing population. The scarcity of financial resources available to rural farmers is a major barrier to improving agricultural productivity and achieving the sector’s full potential, despite its critical role as a source of employment and a driver of rural development (FAO, 2018). This funding shortfall significantly hampers the efficiency of farming operations and contributes to higher levels of unemployment, particularly during periods outside the planting and harvesting seasons (Nsikak, 2018). A robust agricultural sector has the potential to create significant employment opportunities and drive economic growth (Ibidun, 2020).
In response to the escalating risk of food insecurity and the rising cost of food, which may precipitate social issues such as unemployment, the Nigerian government and its agencies have taken decisive action (Odinta, 2018). To address the increasing food demands of the country’s expanding population, the government has implemented several policies aimed at achieving self-sufficiency in food supply, ensuring food security for all citizens, and fostering the production of high-quality inputs for local industries. These policies include increased investment in the agricultural sector and higher budget allocations for agricultural development (Falola, 2020). By December 2017, approximately N55 billion had been invested in the rice industry through the Anchor Borrowers Programme (CBN, 2017). This initiative was designed to alleviate the challenges faced by rice farmers in Nigeria, such as the high costs of agricultural inputs, low crop yields, insufficient revenue, poor-quality seedlings, limited access to fertilizers, low market demand, and challenges related to irrigation and water management (Olakundun, 2019).
Established by the Central Bank of Nigeria (CBN) in 2015, the Anchor Borrowers Programme (ABP) aims to collaborate with anchor companies involved in the production and processing of essential agricultural commodities. This program is part of broader efforts to combat inflation and unemployment. The ABP is designed to support local farmers by enhancing their production capabilities and facilitating the delivery of feedstock to processors, thus reducing the need for imports and preserving Nigeria’s foreign reserves. Within the framework of the program, anchor businesses act as off-takers, leveraging their established expertise and track record in working with out-growers engaged in agricultural production. The program employs a financial model in which anchor firms, along with CBN, NIRSAL, and state governments, coordinate with out-growers and ensure adherence to contractual agreements, thereby minimizing issues related to side-selling. The financing institutions serve as reliable channels for providing credit to out-growers.
1.2 Statement of the Problem
Agriculture is a cornerstone of Nigeria’s economy, making significant contributions to employment, food security, and gross domestic product (GDP). Despite its importance, the sector continues to face persistent challenges, particularly for small-scale farmers who struggle with limited financial resources, access to modern agricultural supplies, and market opportunities (Okocha, 2019). These challenges inhibit their efficiency and earning potential, thereby affecting the overall growth of the agricultural industry. The Central Bank of Nigeria (CBN) introduced the Anchor Borrowers Programme (ABP) in 2015 to address these difficulties and improve agricultural output. The program aims to forge connections between small-scale farmers and anchor companies engaged in agricultural commodity processing. The ABP seeks to enhance the productivity and profitability of small-scale farmers by providing them with access to loans, high-quality inputs, and technical support (Abasiama, 2020).
Birnin Kebbi, the administrative capital of Kebbi State, is a prominent agricultural hub in Nigeria. The region is well-known for cultivating a variety of agricultural commodities, including rice, millet, sorghum, and maize. Despite its considerable agricultural potential, farmers in Birnin Kebbi face similar challenges to those experienced by their counterparts across Nigeria, such as limited access to financial resources, inadequate infrastructure, and low adoption of modern farming techniques (Ademola, 2021). Given Birnin Kebbi’s strategic importance in Nigeria’s agricultural sector, it is essential to assess the impact of the Anchor Borrowers Programme on agricultural commodities within this region. This study aims to evaluate the effect of the ABP on the efficiency, earnings, and sustainability of small-scale farmers in Birnin Kebbi. Although the ABP has been implemented across Nigeria to boost agricultural productivity, improve farmers’ access to loans, and stimulate economic growth in the agricultural sector by providing smallholder farmers with affordable finance for essential inputs such as seeds, fertilizers, and pesticides (Dayo & Ini, 2022), the program faces notable challenges. Therefore, this study will provide a comprehensive evaluation of the impact of the Anchor Borrowers Programme on agricultural commodities in Birnin Kebbi, Kebbi State.
Objectives of the Study
The primary aim of this study is to critically investigate the influence of the Anchor Borrowers Programme on agricultural commodities in Birnin Kebbi, Kebbi State. The specific objectives of this study are as follows:
- To evaluate the program’s effect on rice productivity in Birnin Kebbi.
- To assess the program’s impact on wheat productivity in Birnin Kebbi.
- To examine the program’s influence on maize productivity in Birnin Kebbi.
- To offer recommendations based on the study’s findings to enhance the effectiveness and sustainability of the Anchor Borrowers Programme in Birnin Kebbi.
1.4 Research Questions
- What is the impact of the program on rice productivity in Birnin Kebbi?
- How does the program affect wheat productivity in Birnin Kebbi?
- What influence does the program have on maize productivity in Birnin Kebbi?
- What recommendations can be made to improve the effectiveness and sustainability of the Anchor Borrowers Programme in Birnin Kebbi?
1.5 Research Hypotheses
Ho: The Anchor Borrowers Programme does not have a significant effect on rice productivity in Birnin Kebbi.
Ha: The Anchor Borrowers Programme has a significant impact on rice productivity in Birnin Kebbi.
1.6 Significance of the Study
The Anchor Borrowers Programme (ABP) represents a significant effort by the Nigerian government to rejuvenate the agricultural sector, strengthen food security, and support the welfare of small-scale farmers. Birnin Kebbi, known for its substantial rice production, is an ideal location for evaluating the program’s impact on agricultural commodities. This study will serve as a critical reference for farmers, policymakers, academics, and students.
Understanding the effects of the ABP on agricultural productivity, revenue generation, and overall economic development in Birnin Kebbi can provide valuable insights into how the program enhances farmers’ livelihoods and addresses socio-economic challenges. These insights are crucial for developing strategies that promote equitable economic growth, reduce poverty, and strengthen the resilience of small-scale farmers.
Additionally, the findings from this study will offer valuable information to policymakers and agricultural development professionals regarding the effectiveness of the ABP’s implementation strategies in Birnin Kebbi. The study can highlight successful approaches, identify challenges, and suggest policy modifications to improve the program’s impact on agricultural productivity and sustainability.
By analyzing the effects of the ABP on agricultural commodities, the study can also evaluate improvements in market linkages, value chain integration, and price stability for farmers in Birnin Kebbi. These findings are essential for advancing market-oriented agriculture and enhancing farmers’ competitiveness in both local and international markets. The results may also contribute to the achievement of Sustainable Development Goals (SDGs) such as SDG 1 (No Poverty), SDG 2 (Zero Hunger), and SDG 8 (Decent Work and Economic Growth) by recommending measures to boost agricultural productivity, alleviate poverty, and foster inclusive economic growth in Birnin Kebbi and similar regions.
1.7 Scope of the Study
This study is designed to critically examine the impact of the Anchor Borrowers Programme on agricultural commodities across Nigeria. Specifically, the research will focus on assessing the