Nigeria News

Nigeria Farmers to Access Loans at Lower Rates -Jonathan

Goodluck Jonathan•Onasanya: Banks need incentives for agric lending

President Goodluck Jonathan said Tuesday that government through the Federal Ministry of Finance was working closely with the private sector on how farmers could access loans at low interest rates.

He also assured Nigerians that a process by the Federal Ministry of Agriculture where farmers’ biometry is captured for enhanced identification and would boost lending to farmers, was ongoing, adding that the problems associated with access to finance by small businesses would soon be a thing of the past.

Speaking in Abuja at the opening of the 19th Nigerian Economic Summit (NES) themed: “Growing Agriculture as Business to Diversify Nigeria's Economy”, Jonathan said his administration had identified power as critical to transforming the economy, assuring Nigerians that the ongoing power sector privatisation programme would be tidied up to replicate the overwhelming success story in the telecommunications sector.

He said government also recognised the relevance of power in driving the agricultural value chain.
Speaking earlier during the presidential dialogue, he said his administration was committed to building institutions rather than individuals to allow for sustainability of policies.

He said agriculture remained critical to the country's industrialisation, food security and job creation, adding that the population was too big to depend on imported food.

Jonathan, who noted that the predominance of oil had led to the abandoning of agriculture, said the country was currently targeting self-sufficiency in rice production.

During the plenary on agricuture financing, the Group Managing Director/Chief Executive Officer of United Bank for Africa Plc (UBA), Mr. Philips Oduoza, also said his bank’s target is to increase its total lending portfolio to agriculture to about 15 per cent from the current seven per cent.

“That sector is profitable and could be driven like other sectors,” he said.
He said however that there was need to establish agriculture infrastructure and fix other related costs in order to address the challenges in that sector.

However, Group Managing Director/Chief Executive, First Bank of Nigeria Limited (FBN), Mr. Bisi Onasanya, said investing in agriculture was not “as sweet as envisaged,” noting that banks would need to be incentivised in terms of risk sharing.
He said banks alone could not be expected to lend to agriculture at a level that would be sufficient.

He said the Nigerian Incentive-Based Risk Sharing System for Agricultrural Lending (NIRSAL) should be institutionliased while interest drawbacks should be subsidised to further de-risk the sector in order to enhance credit to the sector.

Onasanya further argued that although NIRSAL had been relatively successful because risks were shared between government and the banks, such risks are not institutionalised and risk sharing is not 100 per cent under the model.
Onasanya said: “The need for industry operators and policy makers to improve the understanding of the sector’s financing needs will facilitate effective funding for the sector.”

He said the financial sector needed deepening to include other sources of long-term finance like venture capital, private equity funds and the capital markets.

According to him, “There is urgent need to clearly identify the parties that would be most ideal in managing the risks in the credit cycle, especially as it pertains to value chain financing.”

He also canvassed the application of technology in farming and in the extension of credit products to the agricultural community, adding that the development of structured products and complementary insurance cover would help identify, mitigate and allocate risks to relevant managers.
He said: “Risks are either to be avoided, diversified, mastered and or managed.”

Anthony-Claret Onwutalobi
Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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