Need for banks to improve agric financing

The renewed interest by the Federal Government and the private sector in agribusiness offers huge financing opportunities for deposit money banks and other financial institutions.

Over the years, agricultural financing has been a challenge in the country as a result of high interest rates occasioned by the sector’s high risk.

The banking industry credit allocation to various sectors of the economy show that the power and agriculture sectors got less than one percent of N15.75 trillion of total loans year-on-year, according to data from National Bureau of Statistic (NBS).

An agribusiness practitioner based in Port Harcourt narrated how he struggled to access credit from two Tier one banks and one Tier two bank but was not successful.

However, the Central Bank of Nigeria (CBN) has approved the disbursement of about N75billion as loan to farmers in the 36 states and the Federal Capital Territory (FCT) under the Nigerian Incentive-Based Risk Sharing in Agricultural Lending (NIRSAL).

The loan guarantee scheme is a public-private sector initiative set up to transform the country’s agricultural sector, which was initiated by the CBN the Bankers’ Committee and the Federal Ministry of Agriculture and Rural Development, to guarantee 75 per cent loans provided by Deposit Money Banks to farmers as part of efforts to transform the country’s agricultural sector.

Since inception, FirstBank of Nigeria limited has taken the lead in agricultural financing according to Audu Ogbe, minister for agriculture, who urged other banks to follow the steps of the bank and improve on their lending to the sector.

In furtherance of its support and value for the development of the Agricultural sector, FirtsBank hosted its first ever Agric Expo summit last week in Lagos.

On financing, Ogbeh was worried about the interest rate level for farmers in Nigeria which stands between 18 percent and 28 percent, stating that “Nigeria was the only country with an interest rate for farmers above 5 percent”. He urged First Bank to pioneer efforts, towards improving access to credit to farmers at a favourable interest rate regime.

In his keynote address, the Country Manager for AFEX Commodities Exchange  Ayodeji Balogun, who spoke on the topic  “Reinventing Agric for Sustainable National Development, said this will require capital, talent and a high drive for productivity in the sector. He also noted that there was need to rethink collaterized lending and consider structured trade finance for the Agric sector.

The event also featured a panel session and an Agric expo exhibition, which was officially declared open by the Minister for Agriculture.

HOPE MOSES-ASHIKE