EXAMINATION OF THE FAILURE OF CENTRAL BANK OF NIGERIA ANCHOR BORROWERS' PROGRAMME IN THREE SELECTED STATES OF BENUE, NASARAWA AND PLATEAU IN NORTH-CENTRAL ZONE, NIGERIA

Abstract

The study examined the underperformance of the Central Bank of Nigeria's Anchor Borrowers' Programme (ABP) in Benue, Nasarawa, and Plateau States in North-Central Nigeria. Despite the nationwide disbursement of over ₦1.12 trillion to approximately 4.2 million farmers since 2015, the program recorded significant adverse effects in the three states. Using an explanatory sequential mixed-methods study design, the study combined Propensity Score Matching-Difference-in-Differences analysis among 690 smallholder farmers (414 ABP beneficiaries and 276 non-beneficiaries) and 45 key informant interviews and 6 focus group discussions. The study evaluated the effectiveness of the ABP on agricultural productivity, farm income, loan repayment, and food security. The results indicate that ABP program beneficiaries failed to exhibit a statistically significant difference in rice or maize yield per hectare compared to their non-beneficiary counterparts. Moreover, a staggering 58.7% non-performing loans indicate financial collapse from principal-agent moral hazard effects, elite capture, and systematic off-take defaults by anchor companies. Crop failure variability was independently explained by the 2022 floods and conflicts between herders and farmers, which accounted for 38% variability. The study concluded that the ABP program failed because it was finance-led and failed to consider institutional gaps, regional agro-ecological zones, and unmitigated climate-conflict risks. Recommendations include disengagement from retail agricultural finance by the Central Bank of Nigeria; biometric and geospatial verification of program participants; implementation of risk-sharing by participating financial institutions; strengthening the law on anchor off-takers; and the mandatory integration of index-based climate insurance into all agricultural finance programs.