A total of N2 trillion was given out as credit to farmers in 2016 by various money deposit bank operators in the country, according to the latest fourth quarter banking sector report released by the National Bureau of Statistics (NBS).
The report shows that agric lending from money deposit banks increased by five percent from N1.9 trillion in 2015 to N2 trillion in 2016. On quarter on quarter basis, banks sectorial lending to the agricultural sector increased by 7 percent from N491.3 billion in Q3 2016 to 525.9 billion in Q4 2016.
Key industry experts who spoke to BusinessDay noted that the seven percent quarter on quarter increase is a very good development but urge commercial banks to give more credit to the sector at cheaper interest rates.
The experts noted that the biggest challenge confronting farmers is insufficient access to agro credit at single interest rates. They stated that insufficient access to agro credit is limiting farmers’ ability to boost productivity and increase farming areas.
“Finance is the biggest challenge confronting farmers. It is a very serious problem that the government need to address by providing farmers will single digit loans,” said Tola faseru, national president, National Cashew Association of Nigeria.
“We need very cheap fund so that our products can be competitive globally,” Faseru said.
But commercial banks operators have often blamed the failure of farmers to access credit on their inadequate book keeping of farming activities.
“Lack of proper record keeping by most farmers has made it difficult for them to get financial support and loans from banks,” Ugonwa Ikegwuonu, team member, agric finance desk, Heritage Bank who was representing Gbenga Awe, the bank’s agric finance group head, said during the BusinessDay breakfast meeting with agric stakeholders.
“Even educated farmers still fail to keep adequate records on what input goes into their agricultural activities; be it seeds, seedlings and fertilisers, or feed for animal husbandry.
“This makes it difficult for banks officials to determine the status of operations and whether or not there is a clear cash flow which makes the business viable enough to refund whatever is loan if given,” Ikegwuonu said.
The sector has seen tremendous increase in investments in and credit for farmers as Nigeria makes frantic efforts to ensure that agriculture play a key role in its quest for economic and revenue diversification.
The Federal government through the Central Bank of Nigeria (CBN) had adopted measure to ensure that the banking sector lend to critical sectors of the economic like agriculture.
The average interest rate in money deposit banks currently is between 28 to 30 percent, industry sources say.
Josephine Okojie
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