USAID Markets II, a project of the United States Agency for International Development (USAID), have held a capacity building programme designed for three Nigerian banks on agric value chain financing.
This was as a result of diagnostic assessments of partner commercial banks carried out by the USAID international in which it identified critical skill gaps in financing agricultural value chains, according to a statement by Godson Ononiwu, director, external relations and capacity building, USAID Markets II.
Building upon these assessments, personnel from three Nigerian commercial banks – Ecobank (Lagos, Port Harcourt and Abuja), Sterling Bank (Lagos and Abuja) and First Bank (Lagos) – received training on key agricultural value chain concepts, such as “strategic partnerships,” “inclusive finance,” and lending tools such as risk mitigation techniques. A total of 200 staff of these banks were trained. Other partner commercial banks are being considered for similar capacity building in the next couple of months.
This process aims to support the banks in expanding lending to agriculture in line with the Central Bank of Nigeria (CBN) directive to increase lending to the sector to at least 5 percent of the bank’s total lending portfolio.
Each training lasted five days for each bank, encompassing four days classroom interaction and one day field visit to agribusinesses to understand the dynamics of the business and challenges being faced in terms of access to credit from commercial banks. The bankers were exposed to the dynamics and relationships within the value chains of different commodities supported by both Markets II and GON’s agric transformation agenda.
Lack of a proper understanding of agricultural value chains, and their actors, coupled with commercial banks’ weak assessment methodologies have been a major constraint to proper assessment and increased flow of financial services to Nigeria’s agricultural sector.
The training programme has been well received by participants, some of whom have used the term, “eye opener” in reference to the training. For most, it has been a “paradigm shift” in the way that they need to do business in Nigeria’s dynamic agricultural value chains. Sites visits exposed participants to major agricultural value chain actors that could be a source of business partnerships with their banks. Many of the visits are leading to the identification of additional financing opportunities for the selected banks.