Kabiru Adamu, Managing Director of Bank of Agriculture (BoA) says additional sum of N33 billion is required by the bank to obtain operating license as a development bank.
Adamu who disclosed this during an interactive session with House Committee on Agriculture, solicited the intervention of National Assembly towards ensuring payment of N18 billion equity by Central Bank of Nigeria (CBN) and Ministry of Finance Incorporated (MOFI).
According to him, MOFI is yet to pay up its N2.2 billion equity while CBN is yet to pay up its N15.9 billion equity.
“We received a letter from CBN stating that the funds require by the bank was N33 billion, it will help us get operating licence as development bank. It will also clean our books and make it attractive,” Adamu said.
While stressing the need to reposition the bank on sustainable basis, Adamu lamented that liquidity challenge facing the bank has greatly impacted on its plan to attract foreign.
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“We are talking to development partners and banks abroad are ready and they have decided to invest in the bank but we are not able to do that because of weak financial status of the bank.
“The bank is not currently included in federal governments budget for its recurrent and capital expenditure, it has been generating income to offset its expenditure through the income level which is insufficient than the losses being experienced,” he noted.
He however noted that the bank has the capability to be self-funded over the next five years when the shareholders fulfill their financial obligations and recovery of huge debt owed by players within the public and private sectors who owed the banks.
According to him, Federal Ministry of Water Resources that was granted three loans between 1981 and 1992 to the tune of N2.4 billion, we have been in touch with the honourable Minister to make provision in the 2018 budget for repayment, hence resolved to grant the Ministry waiver to make it attractive for them to pay.
Despite the poor funding, he disclosed that the bank has over one million customers and funded over 761,000 projects since inception.
While giving update on the financial status of the bank, Adamu disclosed that total loan disbursement reduced from N7.2 billion in 2010 to N3.2 billion in 2011 as a result of lack of fund.
He however noted that the “bank was able to raise the disbursement to N3.7 billion to N5.6 billion in 2012 and 2013 respectively. In 2014 the bank increased its lending improved because of N7.5 billion intervention grants by Federal Government.”
“Our overhead and running cost for 2016 was about N4.3 billion against an income of N2.8 billion while the current overhead and running cost is N2.5 billion against N1.3 billion as at July 2017.
“High non-performing loan is another challenge, the bank has very high non-performing loans issue. Currently what we are doing is to engage our staff to go on aggressive recovery. We have provided incentive by way of commission of the amount that you recover so that they can recover more.
“We have appointed recovery agents who are already on the field negotiating with the farmers and other customers on how we can recover our money.
“We are also in collaboration with security agencies to assist us where it is very difficult for us to negotiate. Some of the hardcore accounts we have take them to court, so we are undergoing litigation,” the BoA helmsman told the lawmakers.
He also urged National Assembly to enact legislations for establishment of Agriculture Development Bank and enable the bank to co-manage part of funds accrued into the Sovereign Wealth Fund as well as wholly manage all agricultural related intervention funds approved by Federal Government like specialized intervention agencies like Federal Mortgage Bank of Nigeria (FMBN), Bank of Industry (BoI), among others.
Other challenges identified by the BoA’s accounting officer include: weak capital base due to lack of funding, failure of shareholders to pay their equity, low loan recovery drive and loanable funds, poor information technology as well as general economy downturn.
While reacting to the financial status of the bank, Femi Fakeye noted that BoA ought to generate operating surplus that would have Federal Government during economic recession.
In the bid to make headway, Fakeye stressed the need to reconfigure the entire modus operandi for the bank which has existed for about 45 years without meaningful progress, stressing that the bank has no justification to be looking for funds to subsidize for its administrative costs.
KEHINDE AKINTOLA, Abuja
