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.