AN ASSESSMENT OF THE POTENTIAL BENEFITS OF THE ANCHOR BORROWERS' PROGRAMME FOR SMALL-SCALE FARMERS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Nigeria is an expansive nation, with its terrain conducive to cultivating a diverse range of crops and raising different types of livestock. The nation possesses abundant people and natural resources of which crude oil has accounted for just 2.7 percent of the total earnings from exports and non-oil exports amounted to N321.2 million, making up 97.3 percent of the total exports during that period (Akpasak, 2019). According Evbuomwan (2021) oil exports make up a significant portion of Nigeria's export earnings, however its contribution to the GDP is lower than that of the non-oil sector. 

Undoubtedly, the proportion of crude petroleum and natural gas to the nation's GDP decreased from 14.95% in 2017 to 9.61% in 2021. In contrast, the agriculture sector contributed 23.35% and 23.11% to the nation's GDP during these respective times (CBN, 2021). Furthermore, the contribution of oil refining to Nigeria's GDP is less than 0.5 percent. This is because Nigeria mostly exports crude oil, and the price of crude oil is established externally. It is concerning that the fortunes of the oil industry have been declining in recent years, which has had severe consequences for the Nigerian economy (Charles et al., 2020).  Regrettably, the price of crude oil has experienced a downward trend in recent years (Ikenna, 2022, and there has been a widespread demand for the Nigerian economy to diversify from its heavy reliance on oil and explore other areas. Given the abundant agricultural resources present in the country, it is evident that this sector will provide a rapid achievement in the effort to diversify the Nigerian economy (Prince, 2021). It is important to mention that the majority of the Nigerian population derive their income from the non-oil sector, particularly the agricultural sector, which employs over 70.0 percent of the population  Nevertheless, For example, the value of imported food and live animals climbed from N1.8 billion, accounting for 14.1% of all imports in 1981, to N2,885.4 in 2016. Additionally, its share of total imports also rose to 20.2% (CBN, 2018). Likewise, the importation of animal and vegetable oil and fat, which is a significant ingredient in the food industry, increased from N0.1 billion in 1981 to N144.7 billion in 2016. This accounted for 0.8% and 1.3% of total imports during those respective time periods (CBN, 2018).

Apparently, the agri-business sector's potential as a significant employer of the expanding labor force and generator of foreign cash has also been diminished. Mike (2021) argued that the agricultural sector serves as the primary source of employment and plays a crucial role in generating wealth and reducing poverty, as a significant portion of the population earns their income from agriculture and other endeavors. However, the current situation in the Nigerian agricultural industry can be attributed to several obstacles that hinder its efficient functioning. The main factors contributing to the challenges in the agricultural sector are the small size of farms, limited mechanization and usage of inputs, inadequate infrastructure, significant post-harvest losses caused by pests and diseases, and insufficient transportation, processing, and storage facilities (Ojo and Evbuomwan, 2017; Evbuomwan, 2021)As a result several funding policy efforts have been implemented in Nigeria to enhance the productivity of small-scale farmers and revolutionize the agricultural industry (Evbuomwan, 2021. Considering the significance of agriculture to Nigeria's economy and the difficulties encountered by small-scale farmers, it is crucial to evaluate the possible advantages of the Anchor Borrowers' Programme. The objective of this study is to assess the influence of the Agricultural Business Promotion (ABP) program on small-scale farmers in Nigeria, with a specific focus on important aspects such as financial accessibility, productivity, and income levels.

1.2 Statement of the problem

Small-scale farmers in Nigeria frequently encounter many obstacles, such as restricted financial access, substandard infrastructure, and insufficient support services, despite the significance of their work. These obstacles impede their efficiency and overall impact on the agriculture industry. The Central Bank of Nigeria (CBN) initiated the Anchor Borrowers' Programme (ABP) with the aim of tackling the aforementioned difficulties (Akan, 2019). The main goal of the ABP is to establish a connection between anchor enterprises engaged in the processing of agricultural commodities and small-scale farmers. The initiative is specifically developed to furnish farmers with essential resources and monetary assistance to enhance their productivity and enhance their quality of life. The Anchor Borrowers Programme offers several potential advantages, such as increased availability of financial resources, improved efficiency and output, better connections to markets, and opportunities for skill development (CBN, 2017). Notwithstanding these endeavors, it is necessary to thoroughly evaluate the potential advantages of the Agricultural Business Platform (ABP) specifically for small-scale farmers in Nigeria.

The primary limitations of the Anchor Borrowers Programme, as assessed by Akinwale (2021), encompass uncertain weather conditions, transportation issues, insufficient extension services, and inadequate financial resources. According to Abiodun et al. (2020), the condition of infrastructure in rural Nigeria, specifically the insufficient transport networks and storage facilities, presents considerable obstacles to the success of the Anchor Borrowers Programme. Farmers sometimes have challenges in moving their agricultural products from the farms to the markets due to roads that are difficult or impossible to pass through, restricted transportation choices, and unreliable logistical services (Akinwale, 2021). Furthermore, the lack of adequate storage infrastructure worsens the problem of post-harvest losses, resulting in decreased earnings for farmers and heightened food poverty in nearby populations. The inadequate infrastructure in place hinders the smooth functioning of the agricultural value chain, hence restricting farmers' access to wider markets and preventing them from maximising their agricultural investments (Abang, 2022). Ibukub et al. (2019) identified several issues associated with the Anchor Borrowers Programme, including a scarcity of extension agents, farmers engaging in side selling, and the distribution of failed inputs and seeds.

Although the Anchor Borrowers Programme initiative aims to enhance the agricultural productivity of smallholder farmers, who form the largest segment in the sector. It does so by providing them with better seeds, promoting best practices in farm management, and connecting them with buyers and processors. This initiative is expected to result in increased economic growth and development in Nigeria, as it will boost agricultural productivity, create wealth, and reduce poverty and unemployment. However, the sustainability of these outcomes depends on the commitment of all stakeholders involved. (Akinwale, 2021). Nevertheless, the successful execution of the ABP relies on the complete dedication of all parties involved. In order to make agriculture a lucrative sector, this initiative requires enhanced funding for agricultural research and development, as well as ongoing training for smallholder farmers by the government and development partners. These efforts will enable the adoption of advanced agricultural practices and ensure higher profits. Enhancing productivity in the agricultural sector in the long-term necessitates the implementation of enhanced research and development practices, as well as improved extension services (Amanam, 2023).

Objectives of the study

The primary objective of this study is to critically assess the potential benefits of the anchor borrowers' programme for small-scale farmers in Nigeria. Specific objectives of this study are to:

To evaluate the extent to which the Anchor Borrowers Programme enhances small-scale farmers' access to affordable credit for agricultural production

To assess the impact of the Anchor Borrowers Programme on enhancing the productivity of small-scale farmers

To assess the impact of the Anchor Borrowers Programme on income level of small-scale farmers in Nigeria

To assess the impact of training programmes under Anchor Borrowers Programme on small-scale farmer’s skills and capabilities.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

To what extent does the Anchor Borrowers Programme enhance small-scale farmers' access to affordable credit for agricultural production?

What is the impact of the Anchor Borrowers Programme on enhancing the productivity of small-scale farmers?

What is the impact of the Anchor Borrowers Programme on income level of small-scale farmers in Nigeria?

What are the impact of training programmes under Anchor Borrowers Programme on small-scale farmer’s skills and capabilities?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There are no significant impact of the Anchor Borrowers Programme on enhancing the productivity of small-scale farmers.

Ha: There are significant impact of the Anchor Borrowers Programme on enhancing the productivity of small-scale farmers.

1.6 Significance of the study

An examination of the possible advantages of the Anchor Borrowers' Programme for small-scale farmers in Nigeria is crucial for establishing comprehensive agricultural policies, fostering sustainable development, and ultimately enhancing the welfare of rural people. The objective of this study is to provide significant insights that will assist decision-makers in creating a conducive climate for agricultural development and reducing poverty in Nigeria.

Through evaluating the efficacy of the ABP, policymakers can acquire valuable insights on how to enhance and optimize current agricultural financing programs. This study can offer evidence-based suggestions to improve the design, execution, and effectiveness of similar initiatives targeting small-scale farmers throughout Nigeria. The results of this study can provide valuable insights to stakeholders, such as government agencies, development organisations, financial institutions, and non-governmental organisations (NGOs), regarding the difficulties and possibilities involved in assisting small-scale farmers. This insight can enhance cooperation and alliances aimed at expanding successful interventions and optimising their influence.

Furthermore, the availability of financial resources and improved agricultural efficiency are essential elements in elevating small-scale farmers from poverty. This study aims to elucidate the impact of involvement in the ABP on poverty reduction through the augmentation of farmers' income levels, enhancement of household welfare, and fostering of economic resilience within rural communities.

Furthermore, small-scale farmers play a crucial role in Nigeria's agricultural sector, making a considerable contribution to both food security and the stability of the rural economy. An assessment of the advantages of the ABP can assist in identifying approaches to enhance farmers' loan accessibility, enhance productivity by utilising superior inputs and technologies, and promote sustainable agricultural methods.

Furthermore, doing research on the advantages of the Anchor Borrowers' Programme (ABP) scheme adds to the existing body of knowledge in the field of agricultural financing and rural development in Nigeria. This serves as a foundation for future research and dialogues regarding efficient strategies to assist small-scale farmers in obtaining financial services and overcoming structural obstacles in agriculture.

1.7 Scope of the study

Broadly, this study focus is to critically assess the potential benefits of the anchor borrowers' programme for small-scale farmers in Nigeria. Specifically, this study seeks to evaluate the extent to which the Anchor Borrowers Programme enhances small-scale farmers' access to affordable credit for agricultural production and assess the impact of the Anchor Borrowers Programme on enhancing the productivity of small-scale farmers. 

Further, this study will focus on assessing the impact of the Anchor Borrowers Programme on income level of small-scale farmers in Nigeria and it also seeks to assess the impact of training programmes under Anchor Borrowers Programme on small-scale farmer’s skills and capabilities.

 The study is carried out in Nigeria. 

1.8 Limitations of the study

Like in any human attempt, the researchers encountered several small limits during the investigation. The primary constraint was the dearth of comprehensive literature on the topic, given the scarcity of data pertaining to assessment of the potential benefits of the anchor borrowers' programme for small-scale farmers in Nigeria. Therefore, a substantial investment of time and effort was required to identify the suitable materials, books, or information and to collect data. 

Moreover, this study is limited by its diminutive sample size and restricted geographical range, concentrating just on Nigeria. Hence, the findings of this study cannot be extrapolated, thereby necessitating additional research. 

Furthermore, the researcher's restraints were predominantly attributable to financial limitations, as they are a student without a means of revenue to support themselves. The research location's high transportation costs, impacted by current inflation in Nigeria, made it difficult to afford transportation fees.

In addition, the researcher encountered a time limitation as a result of the necessity to do this research while simultaneously meeting the responsibilities of attending lectures and engaging in other educational pursuits.

1.9 Definition of terms

Anchor Borrower Programme: The Anchor Borrowers Program (ABP) of the CBN was established in November 2015 with the objective of creating economic linkages between Small Holder Farmers (SHF) and Anchors

Small scale farmers: The term “smallholder farmers” is typically used to describe farmers who own small plots of land (in Nigeria – less than 5 acres of land) which they use to farm subsistence crops and one or two cash crops.