The federal government will shed its majority stake in Bank of Agriculture (BoA) to just 40 percent, as it finalises plans to recapitalize the bank, many years after the restructuring plan to substantially improve its operating framework and enhance governance structure and efficiency was announced.
”The process will lead to the privatisation of equity of the bank. We envisage that the Central Bank equity will be reduced to 20 per cent, Federal Ministry of Finance (incorporated) will be reduced to 20 per cent,” Director General of the Bureau of Public Enterprises (BPE), Alex Okoh said.
“The government agencies equity in the new bank will be a minority of 40 per cent. We will then invite private sector investors who will own 20 per cent and the remaining 40 per cent equity will be owned by farmers and farmers’ cooperatives”.
Okoh who was speaking at the kick-off meeting for the recapitalisation of the Bank in Abuja, said the Bank had performed sub-optimally due to the myriad of challenges it faced since inception in 1972.
According to him, the new strategy envisages that BoA will be transformed into a truly agriculture finance bank modeled along the lines of Agriculture Bank of China and Rabobank of the Netherlands, adding that upon its establishment.
Set up in 1972 to serve as an agricultural and cooperative bank to provide services of a development finance institution, BoA was vested with the responsibility of providing low cost credit to small holder and commercial farmers.
He, however, lamented that the Bank had been unable to realise its responsibilities due to its current structure, stressing that the proposed restructuring and recapitalisation of the Bank seek to transform it strictly into an agricultural finance bank with functional branches in all the local government areas and major towns in Nigeria.
The Director General said that the model was sure to encourage farmers to form clusters of cooperatives and thrift societies throughout the six geo-political zones for the purpose of participating in the ownership of the Bank.
Okoh added that the model would fundamentally ensure that the BOA becomes a farmers’ bank owned by farmers.
On the sustainability of the strategy and attracting new investments, he explained that measures would be put in place to take non-performing credit facilities off the balance sheet and books of the Bank and possibly sold off to a factor agent.
“The measure is to make the Bank attractive to investors and also attract cheap funding from multilateral development institutions and other institutional investors with a focus on agricultural financing,” he stressed.
Audu Ogbeh, Minister of Agriculture & Rural Development, doubles as the Chairman of the Steering Committee for the Project, and according to Okoh, has shown passion and commitment to the development of agriculture in Nigeria.
Okoh was also grateful that the Lead Consortium-the Adviser for transaction had played an efficient role so far, and was optimistic that upon conclusion, BoA would be placed on a platform to optimise its potential to make positive impacts on the nation’s natural endowments for arable farming.
Onyinye Nwachukwu
