Please join us for a research seminar presented by IFPRI Senior Economist/Consultant, Dr. Aderibigbe Olomola, titled "Business Operations of Agro-Dealers and their Participation in the Loan Market in Nigeria." The seminar will cover the challenges and opportunities for agro-dealership financing and proffer policy measures to improve the situation in Nigeria. For the full abstract and bio, see below.
Date: Thursday, August 22nd, 2013
Time: 2:00PM - 3:30PM
Venue: IFDC/IFPRI Conference Room
No 6/Plot 1413 Ogbagi Street
Off Oro-Ago Crescent
Cadastral Zone II
(Near old CBN building and behind Union Homes)
RSVP: Please email email@example.com by the 21st of August to confirm your attendance
The Agricultural Transformation Agenda (ATA) introduced in 2011 sought to tackle the inefficiencies in the distribution of key agricultural inputs making them more readily available and affordable. Despite the efforts of the government of Nigeria to transform the agricultural sector, modern inputs are not available in the right quantity, quality and price. To address this issue, agro-dealers were assigned a critical role especially in the implementation of the growth enhancement support (GES) scheme which took off in 2012. The weaknesses in the agro-dealers’ financial and technical capacity came to the limelight when many of them were unable to provide the financial backing for their role in the distribution of inputs under the GES scheme. As a response, this study sought to examine the challenges and opportunities for agro-dealership financing and proffer policy measures to improve the situation in Nigeria. The study employed primary data collected through questionnaires from 300 agro-dealers across the six geo-political zones of the country. Using a Tobit type-II model we examine agro-dealers’ participation in the loan market and the determinants of loan demand with a view to understanding the functioning of the loan market and interpreting the prospects of relying on it for business financing.
The results show several borrowing patterns. We found that credit rationing is prevalent among the agro-dealers irrespective of the scale of operation. In fact, quantity rationing increases as the level of turnover increases. The probability of participating in the loan market is higher among agro-dealers who are members of trading associations than their non-member counterparts. Agro-dealers who have personal savings to rely on for their business operations may decide not to borrow, whereas those with rising debt levels are likely to decide to participate in the loan market. Lastly, the study showed that there are regional and inter-regional gaps to be filled as well as gender and trans-gender gaps to be addressed to ensure that an increasingly higher number of agro-dealers are empowered to attain a viable business registration status and improved financing in the future. The major determinants of loan demand however, are interest rate, debt, value of asset, membership of trading association and source of credit.
In terms of a policy response, more can be done to improve agro-dealer’s access to credit markets. Financing from commercial banks should be encouraged since they typically provide better access to higher value loans than non-bank sources. More effort could be put into using membership in input trading associations as a signaling mechanism for the creditworthiness of agro-dealers. Diversification of product coverage by agro-dealers should be promoted since this is also likely to enhance their credit rating. Finally, a value-chain approach that links internal financing in the form of trade credit within the agro-input sector with external financing from the commercial banks is strongly recommended.
Prof. Olomola is a Senior Economist/Consultant under the Nigeria Strategy Support Program of the International Food Policy Research Institute (IFPRI) Abuja, Nigeria. Prior to this, he worked at the Nigerian Institute of Social and Economic Research (NISER) from where he is currently on leave. At NISER, he has been Head of the Macroeconomic and Strategic Modeling Unit, Head, Research and Consultancy Unit, Director, Agriculture and Rural Development Department, Editor-in-Chief of NISER’s Journal – Research for Development- and Director of the Surveillance and Forecasting Department of the Institute.
A renowned international scholar, Prof. Olomola was a winner of the prestigious Fulbright Senior African Scholar Award in 1994/95 and to date he remains an Academic Adviser to the Sweden-based International Foundation for Science (IFS). He was a member of the African Capacity Building Foundation (ACBF) Technical Advisory Panel and Networks (TAPNETs) and also a member of the African Union (AU) Task Force on the Establishment of African Research Council (ARC) in 2010/2011.
At the national level he was a member of the Technical Working Group for the Preparation of NEEDS 2 in 2007, a member of the National Technical Working Group on Agriculture and Food Security for the Nigerian Vision 20:2020 in 2009 and a member of the Central Working Group that harmonized the report of the Nigerian Vision 20:2020. He served in a Ministerial Study Group on the Restructuring of the River Basin Development Authorities (RBDAs) in 2009/2010 and in the Drafting Team of the Report of the Transformation Agenda of the Federal Government in 2011.
A prolific writer, Prof. Olomola has numerous publications including books, book chapters, monographs and articles in national and international journals and has wide-ranging experience in consultancy activities. He has consulted for several organizations including the World Bank, UNDP, ILO, FAO, IDEP, UNU-WIDER, IFPRI, CIDA, ODI, ACBF IIED and AERC all in the areas of agricultural and development economics. He holds a PhD from the University of Ibadan.