Nigeria’s Cashless Redesign Excludes Smallholder Farmers and the Average Nigerian

What are your thoughts on the naira redesign policy and how is it currently affecting the Nigeria’s agriculture sector or how has it affected the sector?

Thanks for the opportunity, Clarion. Let me start by saying that the naira redesign policy is a monetary policy and a great idea because it is constitutional for the purpose of monitoring inflow and outflow of money in a country and can be employed to avoid stocking of funds by individuals.

The sad reality is that government have not factored the needs to put in place adequate facilities that can cater to the needs of the masses, especially those that are not captured in the banking system like the rural smallholder farmers

The Central Bank of Nigeria (CBN) has the right to embark on this and there is nothing wrong with it. This has resulted in a situation where cash became so scarce even for the farmers who need to be paid after every transaction. Most farmers always insist that you pay them cash even those who do not operate a bank accounts. The food supply chain has been experiencing disturbances even before the pandemic resulting in hike in price and resulting to food insecurity. Apart from the global economic meltdown credited mostly to the COVID-19 pandemic, Russian-Ukraine war, regional instabilities, closure of border due to the Fulani-Cattle herds’ issues which affect food and agriculture production. Farmers and middlemen within the supply chains of food are subjected to severe economic torture due to frequent cases of insurgency.

The sad reality is that government have not factored the needs to put in place adequate facilities that can cater to the needs of the masses, especially those that are not captured in the banking system like the rural smallholder farmers. The fact is that most farmers in the rural areas do not have access to the new naira and they cannot engage in online transactions owing to the fact that they would not be able to buy or sell anything from the market ranging from materials, commodities, logistics and even payment of workers or labourers without cash, and the new notes which are not in circulation.

Many farmers in rural communities do not have access to banks. What can be done to minimize the negative impacts of this policy on them?

Truly, you use currency for everything as the impact would have been worse if we are in the planting or rainy season period when large percentage of farmers in Nigeria and other nations around the equator are encumbered in their farming activities.
It is of utmost importance that farmers are properly educated on internet or online banking and how it will impact food and agricultural supply through usage of mobile phones.

In most rural areas, Point of Sale machines (POS) is the last resort for farmers who withdraw money by paying extra money much more than the normal charges due to the scarcity of the new Naira notes. The CBN should have embarked on proper awareness creation giving enough and timely publicity for the process to be carried-out effectively and efficiently

In most rural areas, Point of Sale machines (POS) is the last resort for farmers who withdraw money by paying extra money much more than the normal charges due to the scarcity of the new Naira notes

Kenya’s type of M-PESA can be adopted for Nigeria’s agriculture sector. Kenya’s government is leveraging on usage of mobile phones and the Apps to embark on money transactions for effective and efficient operations within the supply and value-chains.
Mobile phones are of great essence in networking as electronic wallets is a way farmers can utilize money in the remote places where their farms are situated. Mobile phones make transactions easy.

Alternatively, government can reinstate commodity boards associations which used to be platforms where farmers could access extension and advisory services such as agro inputs such as fertilizers, seeds and seedlings, to mention a few. This will go a long way in improving farmers’ productivity and yields. More so, this could help in minimising of postharvest losses and can eliminate the middlemen who foment unnecessary boitlenecks for the farmers thereby keeping the market imperfect. As a food marketing specialist, I can underscore that the presence of too many intermediates will bring about exploitation of both farmers and consumers with the marketing agent offering lower prices to farmers and exacting higher prices on the consumers. And this is how that works

Experts have said one of the reasons for the naira redesign policy is to reduce inflation. What is your opinion on this assertion? Can you elucidate?

Yes, it can reduce inflation and it depends on the type of inflation you are referring. We have about 5 forms of inflation which are demand pull, cost-push, open, repressed, hyperinflation and so on.

The CBN raises interest and deposit rates for people to protect themselves from paying extra debts or from experience a direct impact of inflation
Watch out the next release from the National Bureau of Statistics, you will see that the amount of spending this period was on the decline cos it was temporal.

But let me explain demand-pull inflation and cost-push inflation. Demand-pull inflation occurs when there is an increase in aggregate demand, and the supply remains the same or decreases. When supply cannot meet growing demand, prices for goods and services rise higher. Two causes of demand-pull inflation are: increasing export demand which can forces an undervaluation of the currencies involved. Also, government spending which leads increase in prices of commodities.

On the other hand, cost-push inflation is caused by higher costs of production, such as rising oil prices, higher nominal wages, and increased commodity prices. To reduce this kind of inflation, government can pursue deflationary monetary policy and/or supply side policies.

The two types of inflation can either arise based on the demand side or price of inputs in the economy. As a matter fact, the demand side factors result in demand pull inflation, while the supply side factors result in cost push inflation
So, in this case, we have a cost-push inflation and this explains why exchange rate in on the increase, devaluing of naira and rising interest rates.

Do you think the cashless policy that the Federal Government is aiming at would have any positive impact/effect on Nigerian Farmers and agricultural practices?

Can I say that a cashless policy that operates on a priceless structure without a support system will absolutely not work and will more or less result to absolute torture for key players especially the smallholder farmers who have negligible resources to forge ahead in their farming practice. No doubts, it will reduce CBN’s cost of printing money and reduction of costs of business transactions, deposit money and other bank transactions. This causes so much delays resulting to farmers traveling from the villages and remote places where their farms are situated and even get robbed thereby facing all manners of insurgency. I want to believe that Nigeria can implement this flawlessly if the right policies and platforms are in place.

A large percentage of farmers in Nigeria are smallholders who grow crops in small quantities and sell directly to consumers to exchange for cash as a good number of them have little or no knowledge about internet banking. How can we effectively educate smallholder farmers on electronic banking and what short, medium and long term measures should be put in place?

When Dr Akinwumi Adeshina was Minster for Agriculture he tried to donate phones to smallholder farmers because he knew that every intervention that would transform agriculture sector must factor those category of farmers. However, Nigeria’s smallholder farmers are recorded to be too poor to afford cell phones

Personally, I would not advocate for farmers to single-handedly bear the burden of production and farming since that is more of a systemic problem. The role of government is quite important in this since they are in the right position to formulate and enforce policies. It is in their place to promote policies that encourage e-banking. When Dr Akinwumi Adeshina was Minster for Agriculture he tried to donate phones to smallholder farmers because he knew that every intervention that would transform agriculture sector must factor those category of farmers. However, Nigeria’s smallholder farmers are recorded to be too poor to afford cell phones, which strikingly differs from middle class Nigerians who often have up to 3 mobile phones on different networks to obtain the best service. Thus, the Nigerian Agricultural Ministry has implemented a plan to provide 10 million mobile phones to the nation’s poorest farmers, including half of the phones going to women since they are the predominant gender in agriculture.

Nigeria’s government has to borrow a leaf from Kenya’s M-PESA. The government of that country is attempting to spearhead the initiative for their farmers as that service leverages farmers to transfer money from their M-Pesa account, using PIN-secured SMS text messages, to other users and nonusers, who can then exchange it for real money. This service can be used in depositing, withdrawing and transferring money, as well as paying for goods and services or even accessing credits and savings, using a mobile electronic device. M-Pesa is also being used in other COMESA states such as Tanzania, South Africa, Afghanistan, Lesotho, DRC, Ghana, Mozambique, Egypt and Ethiopia.

What can be done to make food affordable for average Nigerians?

Can I say that there is need for the government to revamp the operations of strategic statutory commodity boards which are responsible for production ranging from product development, market research providing pieces of advice to government, among other roles. Role of commodity boards ensures that provision about infrastructure facilities for reserves, storage and modern technologies.

Firstly, I think it's by investing more money (both in the farm and processing unit), creating a network of interested farmers, educating them on how to farm and use modern technology in the agricultural sector and creating policy to guide and govern the association.

This is of great importance as it will provide the poorest farmers who have the ability of increasing food production in Nigeria. Thus, decreasing the need for food importation, with access to the necessary tools and ingredients to adequately cultivate their lands.

Secondly, the importance of government in driving this transformation cannot be over emphasised as they have to intervene by avoiding subsidies not for inputs but largely for knowledge-transfer, infrastructure development, postharvest operations, pricing, among other areas.

Government needs to strategise more in tackling food losses and waste problems. It is pertinent to note that in food crop losses and wastes, what is lost is not just the food crop, but also the water, land, improved seeds, among other inputs that were used. Indeed, there is a whole lot of environmental impact on the food lost.

As an expert in agriculture management, what are the lapses in Nigeria's agric practises and management?

Thanks for that question. And I must say that it is high time we revisit some of those policies that were implemented and not being enforced like the Land Use Act Decree of 1978, Green Revolution, Operation Feed the Nation to mention a few.

We need to think and encourage the right type of education which should be somewhat holistic in building the entrepreneurial capacity of youngsters and youths

I really pray the six-year national agricultural policy strategy which is designed for implementation between 2022 and 2027. Its major aim to attain sustainable development of national technological and innovative capacity so as to fast-track import substitution with particular emphasis on the reduction of rice, dairy and fish importation. I really hope stakeholders of economic progress in Nigeria like government, diaspora leaders and even private investors need to strategise plans on how to empower rice growers, dairy farmers and fishers to enable them focus on servicing the national economy.

I would not want what happened when the CBN reneged by pacing a ban regarding releasing subsidies for wheat importation on wheat importation by placing a ban. Like I mentioned that to Deutsche Welle TV that it was a nice decision but at a wrong time. Nigeria imposes a five percent tariff on wheat imports, plus an additional 15 percent levy (earmarked for the national wheat development program) for a total 20 percent duty. We must not forget that a theory in food economics advocates that reducing food supply will increase its price. There is a general belief therefore that if local supply cannot immediately replace imported food(s), Nigerians will end up spending more on food.

More so, we need to think and encourage the right type of education which should be somewhat holistic in building the entrepreneurial capacity of youngsters and youths. That takes me to the brain re-engineering concept and reimagination of which I am the advocator. This concept is not just an educational strategy but a solution that hinges on changing this perception problem as it stands to provide a veritable strategy in transforming sunken economies like that of Nigeria through the agriculture or agribusiness sector in an age where environmental concerns and climate change issues are at an all-time high.

The reality is that our population is growing, and increasing shortages of land and water poses a noteworthy threat to the longevity of humans as we know it. But while many politicians stall at a glance, agriculture technology start-ups are busy taking action and the youths must be variously engaged. Of course, youths are the rationale behind this concept, but can also work in empowering women through the process of re-engineering of their mindset, ideologies and perception especially for communities where their traditional values are antithetical to women empowerment. Similarly, women play a significant role in agricultural production and household food security.

A structure must be put in place for farmers and agriculture practitioners to access funds

In essence, having good agricultural managers will mean there must some platform that creates a good educational environment for enlightenment with game-changing technological solutions which will, to a great extent provide some knowledge-sharing platforms where farmers would share their experiences, as well as receive exposures on how best farming can be made efficient and effective.

More importantly, a structure must be put in place for farmers and agriculture practitioners to access funds. This can be achieved by either operating or growing a farm as well as enrolling for capacity-building programmes which can help them achieve success in better agricultural management. I lived in South Africa during my postdoctoral research fellowship under a collaborative project between Agricultural Research Council and Fort Hare University and I can say that the biggest development fund for farmers is the Land Bank. This organisation offers farmers the opportunity to get funding for farm purchases, mechanisation, production, farm improvements and infrastructure development. As with private banking institutions, the applications are credit profile based.

Coming back to food losses and wastes, some barriers to tackling them are limited knowledge of food losses and solutions; broken channel of distribution for loss-reducing technology; limited farmers’ capacity; limited credits/financing opportunities; difficulties to efficiently linking supply and demand.

Overall, I think the CBN's monetary policies have been fairly successful in encouraging more agricultural production and investment in the sector.

Interestingly, Nigeria is said to contribute about 50% food supply in the ECOWAS region and it has comparative advantage over countries in supply of many food crops. However, as a result of postharvest losses due to poor storage facilities, profits generated in the value-chain are lost thereby resulting to infrastructural deficits, poor implementation of policies to support farmers, which was heightened by COVID-19 pandemic, Russia-Ukraine war, among other crises as that affect farmers who are majorly smallholder farmers. Farmers were forced to incur losses as a result of them selling less in order to reduce wastes. This therefore underscores why farmers, farm managers and entrepreneurs must position themselves in the food supply chain to ensure that the production resources (land, labour and capital) are effectively managed to ameliorate the constraining factors to effective management.

Generally, what is your review of the CBN's monetary policies that directly affect the agricultural sector, since this administration started in 2015? Which of the policies has greatly influenced the agriculture sector and how?

Overall, I think the CBN's monetary policies have been fairly successful in encouraging more agricultural production and investment in the sector. The Anchor Borrowers Program (ABP) has been especially effective in increasing access to credit, enabling more small farmers to take advantage of loans and credit facilities. This in turn has led to increased agricultural production and better quality of produce. The increase in agricultural production has also had a positive knock-on effect on the economy, as increased agricultural output has led to more jobs and increased economic growth. In addition, the CBN's various initiatives such as the Cashless Policy and the Agricultural Credit Guarantee Scheme have had a positive influence on the sector.