FG wants Banks to Invest 25% of their profit share in BoA to improve farmers lending
To ensure farmers enjoy easier access to credit facilities at single digit interest rate,the federal government wants commercial Bank’s in the country to invest 25% of their Bank Profits into the Bank of Agriculture,(BoA), which is targeted at ensuring farmers get easier access to credit for their farming activities with les stress.
Nigeria farmers are currently being stifled by access to credit facilities with the Bank of Agriculture yet to commence full operations,but the government has given assurance that it would explore every options that would enable farmers have easier access to credit at better rates,to ensure food availability.
To this end,the Minister of Agriculture Audu Ogbeh informed BusinessDay that the Ministry is working closely with the CBN to ensure Bank’s invest up to 25% of its profit share into the Bank of Agriculture to improve lending.
He said,”We are trying to work a system wherein the banks could lend at one digit.It is very difficult for the banks to do such kind of lending,but one thing the we are doing closely with the CBN is proposing is that Bank’s should invest 25% of their Profits into the Bank of Agriculture.
We expect that Bank’s now to pay more active role in Agricultural lending because Agriculture is not as bad or as risky as it is being portrayed.We also expect banks to improve lending to farmers at a single digit interest rather than the high rate of 22-26 % interest rate,Ogbeh added.
Ogbeh also informed that Plans has already started with the federal Ministry of Agriculture and the Central Bank of Nigeria’s partnerships on the model of investment by the Banks.
This ,Ogbeh said would save the Bank’s the burden of chasing day to day creditors and the as the Bank of Agriculture would invest that money and pay them back.”Ogbeh said.
Recall, the Federal Government has officially inaugurated the interim Board members of Bank of Agriculture,(BoA) to take charge of credit lending to farmers.,while also charging them to also take charge of the CBN’s Anchor Borrowes which would enable it ensure farmers get credit at single digit ease agribusiness
Ogbeh said the farmers now have a bank to call their own and access credit facilities easier and faster,amid constraints often faced from commercial banks on loan lending which hovers around 22-26%.
It would be noted that Nigeria spends 66% of Tax revenue servicing debts,according to World Bank reports,and experts insist such practices are no longer sustainable,arising from dwindling revenue,as Agriculture can chart the way forward for the diversification of Nigeria’s economy,given its level of contribution to the GDP.