Financing Smallholder Rice Farmers: A Field-Based Evidence Review of Anchor Borrowers’ Programme (ABP) Model in Nigeria

Abstract

Nigeria's spending of US$2billion annually on rice importation has been considered a major source of foreign exchange drain and a threat to domestic rice industry. One of the major reasons adduced for this high import bills is the persistent demand-supply gap arising from the country's inability to increase domestic output of paddy rice to optimize the total capacity of several integrated rice mills established across the country in the last 15 years. In 2015, the government launched the Anchor Borrowers' Programme (ABP) to make cheap funds accessible to smallholder farmers (SHFs) who produce more than 85% of total farm output in Nigeria. ABP is designed to encourage banks to lend to SHFs to boost paddy rice production. This paper presents the field experiences of SHFs, banks and rice millers who participated in the programme in 2016/2017. This paper concludes that ABP is a laudable programme that can contribute in achieving the food security objective of the government. The key challenges found to be threatening the success and sustainability of ABP included delays in timely disbursement of funds by deposit money banks (DMBs), inadequate personnel and institutional framework, side-selling of harvested paddy rice by SHFs, State government undue involvement in the ABP, and poor rural infrastructure. Policy recommendations to strengthen the ABP model for improved impact were discussed.Key Lessons from the 2015 -2017 ABP: Field experience of DMBs indicated that farmers in the more remote rural areas easily repaid their loans more than those in the Urban and semi-urban areas. Farmers in urban and semi-urban areas were mostly civil servants who are already indebted to other lenders. There was higher loan recovery from farmers who owned just one hectare of farmland than those who owned more than one hectare. This agrees with the findings of Oke et al. (2007) and Kohansal and Manosoori (2009) who in

Distributional impacts of anchor borrower program on the welfare of rice farming households in Oyo State, Nigeria

“…To our knowledge, no study has investigated the heterogenos impacts of ABP or any national development intervention across the distributions of welfare for farming households in Nigeria. Previous studies that assessed the impact of ABP on rice output (Obih and Baiyegunhi, 2018;Ayinde et al, 2018;Okeke et al, 2019) reported an average positive effect of the intervention. They, however, assumed a homogenous treatment effect of ABP which is usually not the case when treatment is not randomly assigned and also, in the event of imperfect targeting.…”

“…To our knowledge, no study has investigated the heterogenos impacts of ABP or any national development intervention across the distributions of welfare for farming households in Nigeria. Previous studies that assessed the impact of ABP on rice output (Obih and Baiyegunhi, 2018; Ayinde et al ., 2018; Okeke et al. , 2019) reported an average positive effect of the intervention.…”

Contributions of Anchor Borrowers Programme to Rice Farmers’ Productivity in Ekiti State

“…High cost of labour (𝑥̅ =1.86), not having a fair price for produce (𝑥̅ =1.74) and poor quality of input (𝑥̅ =1.62) were major constraints faced in participating in ABP. Obih and Baiyegunhi (2018) revealed that the high cost of labour applies to various stages of rice cultivation and hinders farmers' productivity.…”