MICROCAPITAL STORY: Nonprofit Nigerian Institute of Animal Science Urges Microfinance Institutions to Ensure Food Security

Responding to an emerging world food shortage, nonprofit research institute Nigerian Institute of Animal Science (NIAS) has urged the country’s microfinance institutions to aim their microlending services at small and large-scale livestock farms to ensure food security.

Placid Njoku, president of NIAS, implored Nigeria’s MFIs while delivering a lecture commemorating the 42nd anniversary of Nigeria’s University of Ibadan’s Department of Animal Science. While Njoku proposed that microlenders increase lending toward livestock farms, it is not clear whether he offered specifics on how government might induce MFIs to adjust lending practices, such as incentives or regulations. In the same speech, the NIAS representative also implored provincial and local governments to subsidize animal farm inputs, and proposed that government agencies collaborate with private firms in developing livestock sales outlets throughout Nigeria.

While NIAS called on Nigeria’s burgeoning microfinance industry (p.9) to serve food-producing borrowers, financially sustainable agricultural microlending remains one of the sector’s greatest challenges. A report by CGAP (Consultative Group to Assist the Poor) on agricultural microfinance cites two key reasons for this challenge. First, the seasonality of agricultural produce (p.1) prevents borrowers from making timely repayments on microloans that often have short terms and frequent repayment rates. Second, agricultural borrowers generally reside in rural areas, in which poor infrastructure (p.1) such as roads and telecommunications create high transaction costs for lenders, ultimately deterring them from rural lending.

The 2007-2008 world food shortage – spawned by a combination of droughts, soaring fuel prices, and increased consumer demand – has caused dramatic increases in prices of some of the world’s most basic food commodities. Developed and undeveloped countries around the world have experienced the effects. In Nigeria, the price of a 50 kg bag of rice has risen from NGN 8000 (USD 65) in December 2007 to NGN 11,000 (USD 94) in April 2008.

The Nigerian Institute of Animal Science is a research organization that was inaugurated in October 2007. NIAS does not publish a website or disclose its financial information. Before taking the helm of NIAS, Professor Placid Njoku was most recently Vice Chancellor of the University of Agriculture, Umudike.

By Ryan Benson, Research Assistant

Additional Resources:

Calibre: Institute Tasks Microfinance Firms On Food Security, by Iminu Imam, June 20, 2008

African Press Agency: Shortage: Nigeria to Import 500,000 Tonnes of Thai Rice, April 30, 2008.

ABC News: Food Prices Soaring Worldwide, by Katherine Corcoran, March 24, 2008.

New York Times: A Drought in Australia, A Global Shortage of Rice, by Keith Bradsher, April 17, 2008.

Nigerian Tribune: Nigerian Institute of Animal Science Inaugurated, by Sade Oguntola, October 5, 2007.

CGAP: FINANCIAL SERVICES FOR THE RURAL POOR, Donor Brief, No.15, October 2003.

Courtesy Microfinance Gateway: Microfinance in Nigeria: Policy, Practice, and Potentials, C.M. Anyanwu, November 2004.

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