Bank of Agriculture trying to ease access to Agriculture Loans

The one million dollar grant to the Bank of Agriculture (BOA) by the African Development Bank(AfDB)  to restructure and strengthen its capacity in responding to emerging challenges comes as food-for-thought to Nigerian farmers and the country at large. Reinvigorating the bank would no doubt boost the nation’s economy as it would facilitate provision of raw materials needed by the manufacturing sector. Furthermore, it will conserve foreign exchange on importation, reduce unemployment and create more lucrative jobs and curb the effect of rural-urban migration.

According to Kabiru Adamu, CEO, Bank of Agriculture, “considering the nations teaming population and unemployment, under the agriculture revolution more land will be cultivated as Nigeria has over 80 per cent arable land but unfortunately less than 40 per cent of the land is cultivated’’.  One persisting challenge however, is how to recover such loans given out to farmers. The bank is still working to recover the N60 billion owed it by farmers. He said the intervention by AfDB was timely as the new BOA executives had inherited a lot of liabilities due largely to the failure of farmers to repay loans granted them.

It is on record that most of the beneficiaries are not willing to pay back the loan because they are seeing it as a national cake, but the bank has to make all efforts to recover all the money disbursed as loan to farmers. The CEO explained that: “My team inherited a lot of liability from the previous management of BOA, a lot was done to clean their books and recover so many loans and the loan recovery exercise is still ongoing. The team has just finalised the 2016 outstanding accounts and work has commenced on the 2017 accounts, even at this a lot still need to be done to ensure a clean book.’’

One of the right steps taken so far is that BOA officials are always with the farmers now unlike before. This is meant to avoid diversion of funds and this will make farming a profitable venture for the farmers and they will repay the loan. This life line would re-engineer the bank to be more efficient and carry out its mandate for the benefit of farmers and the nation. The bank has strengthened its risk framework in a way that farmers won’t just access loans freely as before due to adequate monitoring and constant evaluation.

The issues this laudable initiative raises are fundamental to sustainable national food security. What are the criteria used to identify the farmers that need the loans, in the first place? Were there credible data on their performance and ability to repay such loans? Or were the loans given out on the basis of political patronage? How many of the beneficiaries are engaged in large scale farming? How many of them are involved in agronomy and what percentage is into animal husbandry? And how transparent are the processes of procurement of such loans?

Answers to these questions have become necessary if BOA is truly concerned in developing the new agenda that will ensure food security, job creation as well replace the ageing farmers with younger ones and make agriculture more attractive, as promised by Adamu. It is also noteworthy that BOA is into strategic collaborations with major stakeholders in the industry aimed at creating more jobs for the teaming youths and equip farmers for sustainable agricultural development. These include the partnership with the Development Bank of Nigeria  and  Nigeria Incentive-Based Risk Sharing System for Agricultural Lending. Its benefit is that it will reinvigorate MSMEs as it involves risk-sharing arrangements. Another aspect of such partnerships was the signing of a Memorandum of Understanding with 30 business executives and officials from Germany

Other modules adopted to meet its mandate include signing an e-banking agreement with the SunTrust Bank using its existing 140 branches in the country to reach its farmer customers. “The bank will also provide Mobile Money Service, Merchant and Settlement Accounts for e-transaction, deploy its innovative banking services and other complimentary e-banking services to simplify BOA services to its over one million farmers.”

It is noteworthy that BOA, Nigeria’s foremost agricultural and rural development finance institution was incorporated in 1972 as Nigerian Agricultural Bank before it transformed into the Bank of Agriculture Limited in October 2010. It is wholly owned by the Federal Government of Nigeria with 40 per cent of its shares held by Central Bank of Nigeria and 60 per cent by the Federal Ministry of Finance Incorporated.

Agriculture has since the pre-colonial times been identified as the main stay of the Nigerian economy, with agricultural produce abounding in every state of the federation. The challenges have always had to do with the limited capacity for processing and preservation. These have resulting in huge losses and wastages accounting for as much as 50-60% of farm produce. It was such observation that prompted the Bank of Industry (B0I) to establish the Cottage Agro-Processing (CAP) Fund to support the establishment of cottage agro-processing plants. They are  to produce food products and raw materials for industries within and outside the Staple Crop Processing Zones (SCPZs) Bio agric processing fund. The Fund ensures that anticipated risks are dimensioned and mitigated by its transaction structure. It enhances goodwill by supporting agricultural production, rural development and to create employment.

With the promise to grant support to over 2.5 million farmers nationwide during the cropping season, with  inputs and certified seeds data capturing in addition to farm inspection for the participating farmers before the loan disbursement BOA is on the right track. But one’s concern is that there should be priority to the rural farmers. They are those who require support with tractors, harvesters, pesticides, high-yielding, disease-resistant and early-maturing seedlings.

The truth however, is that they require the services of farm extension workers who would educate and enlighten them on modern farming techniques include that of storage/preservation and processing. They would work with the farmers to ease their access to agric loans with single digit interest loans and make repayment stress free. Only these measures would sustain agricultural growth. The time to stop the importation of what we could produce locally is now.

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