Nigeria’s obsession with rice and the bottomless subsidy pit

In Nigeria, as in many countries in West Africa, rice is a staple. When a crisis a decade ago caused an acute rice shortage imports rose dramatically, and while an estimated 71% of Nigerians work in agriculture the country has never managed to achieve self-sufficiency. Since 2015, President Muhammadu Buhari’s government has made rice self-sufficiency a flagship policy with a combination of farmer incentives and an import ban.

Nura Baure, chairperson of the Rice Farmers Association in Daura, Buhari’s hometown, is a staunch defender of the rice revolution. He told journalists last week that about 1,108 rice farmers in the locality were set to receive loans for 2019 under the first phase of the much-touted Anchor Borrowers’ Programme (ABP). The second phase is scheduled to begin in June, with 5,800 beneficiaries.

The Central Bank of Nigeria set up the ABP in 2015 to empower farmers in cooperative societies to get loans at single-digit interest rates – far lower than those offered by conventional lenders. Buhari symbolically launched the initiative in November that year in Kebbi State – one of the states with the highest rice production capacity nationwide.

Government and tinted spectacles

To outward appearances the programme has been a true success – at least in the eyes of the government.

• Last year, Godwin Emefiele, governor of the central bank, announced that more than 2.5m jobs have been created since the advent of the scheme, with more than 862,000 farmers participating.
• In 2018, agriculture minister Audu Ogbeh also sensationally claimed that Nigeria’s rice revolution had led to a drastic fall in imports from Thailand, leading the Thai ambassador to come to his office bemoaning the closure of seven rice mills. The diplomat denied this, accusing Ogbeh of distorting the facts.
• Ogbeh’s colleague, the also-bespectacled Lai Mohammed, also claimed rice imports were declining. He refuted a US department of agriculture report that claimed Nigeria had imported 3m tonnes of rice in 2018, 400,000tn more than the previous year. “I want to say categorically, again – without fear of contradiction – that the Anchor Borrowers’ rice programme is working. Nigeria has been able to reduce by 90% the $1.65bn it was paying on rice importation. The number of integrated rice-processing mills increased from 13 to 25,” the information minister said in a statement.

Giant with feet of clay

According to Bloomberg, Nigeria was the world’s third-largest importer of rice in 2018.

On 21 May, Nigeria’s Premium Times released the results of a comprehensive investigation that showed the ABP had, in fact, spectacularly failed. An overwhelming majority of farmers had failed to pay back their loans. Another fraction never received the money.

• Apart from complaints about expired herbicide and bad seeds, it turned out that many of the farmers had been selected on the basis of political patronage and the monies were distributed in cash, rather than in bank accounts as stipulated to ensure the contribution of 5% as equity.
• According to a representative of the Rice Farmers Association of Nigeria, “farmers collected loans and they thought it was national cake being distributed to them. There were some local government chairmen in the north that told them that they shouldn’t bother themselves to pay the money because, when they visited their farms, there wasn’t anything to show for the money they got.”
• Things got so bad that last June, the Bank of Agriculture announced it was joining forces with the Economic & Financial Crimes Commission to chase loan defaulters. As at the time of writing, there has been no major headway on this.

Still, the government is persisting with the implementation of the programme. This year’s new loans are proof of its relentlessness. In 2018, it also approved a N60bn ($222m) subsidy programme to drive down the price of rice in the market.

Bottom line:

Somehow, rice smuggling still thrives despite the government ban, and foreign rice brands, which are preferred by many Nigerians, remain more affordable than the local ones. It might pay for Abuja to be more introspective and to probe why it is cheaper to buy a commodity imported and smuggled into the country by any means possible than its homegrown version.