FMDQ, others seek alternative financing for agribusiness amid COVID-19

Stakeholders in the financial sector have called for the creation of financing solution through issuance of the green bond by agriculture sector to sustain food security amid COVID-19 pandemic.

They made the call on Thursday at a webinar oragnised by FMDQ Holdings Plc, Climate Bonds Initiative (CBI) and Financial Sector Deepening (FSD) Africa.

The capacity building webinar had the theme: “Green Financing Opportunites for Agricbusiness”.

They said that stakeholders in the sustainable finance sphere in the Nigerian agribusiness, sub-sector would need to explore opportunities offered by green bond financing to ensure food security.

Chief Executive Officer, FMDQ Group, Mr Bola Onadele said that the increasing world population and disruptions caused by a novel coronavirus had made alternative financing solutions imperative.

“As the world population expands, with an increasing rate in Africa, meeting our growing demand and ensuring future environmental securities now require creating financing solutions.

“The agricultural sector in Nigeria play a critical role in the economy, it contributes 25 per cent of the GDP (Gross Domestic Product) with great potential for employment generation, food security and poverty reduction.

“Despite being endowed with large vast of very good lands and opportunities within the agricultural sector in Nigeria, that sector remains largely underutilised.

“In actual fact, Nigeria is ranked seven in the World Bank’s December 2019 evaluation of countries’ performances in agriculture across Africa,” Onadele said.

According to him, access to finance has been an impediment for the agricultural sector due to several factors not limited to lack of an enabling environment and high transaction costs.

Onadele added that the COVID-19 pandemic had resulted in interruptions in logistics and global food shortages.

“The agriculture sector also faces immediate challenges to find ways to produce significantly larger amount of food to ensure food security, not neglecting the cash crops as a source of earnings for the nation.

The Deputy Chief Executive Officer and Director, CBI, Ms Justine Leigh-Bell said that food security was a major concern of everyone in the world due to COVID-19.

Leigh-Bell said that green bonds would enable issuers to raise large amounts of capital to support environmental investments that might not otherwise be available or might have been funded using expensive capital.