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Tag: agric financing

  • Agric financing: New rules, new hopes

    Commercial banks got a marching order from the Central Bank of Nigeria (CBN) at the last Bankers’ Committee meeting – to give loans to agriculture and manufacturing concerns at single digit interest rate. The directive followed the CBN’s amendment to the Commercial Agriculture Credit Scheme (CACS) and the pegging of maximum loans for projects at N2 billion. COLLINS NWEZE writes on the renewed drive by banks to lend to farmers and its implications for the economy.

    In times past, farmers were the least that banks would consider for loans. Such loans, if approved, were deemed lost from the outset. But, the tide has turned as banks scramble for agric businesses. The lenders have seen the potential of how much a well-priced loan can add to their balance sheets and profitability.

    The Central Bank of Nigeria (CBN) has, in a move to sustain the trend, amended the Commercial Agriculture Credit Scheme (CACS), pegging the maximum loan intake for any project under the scheme at N2 billion.

    Besides, the CBN-led Bankers’ Committee bought into the agric-financing project, making various promises to banks that show interest in the scheme.

    It has promised banks that lend to agriculture and manufacturing at nine per cent a refund of part of their Cash Reserve Ratio (CRR), which a portion of banks’ deposits (22.5 per cent) kept with the apex bank.

    The Director of Banking Supervision at the CBN, Ahmad Abdullahi, said the regulator will refund banks that fund projects in agriculture and manufacturing with CRR refund.

    Speaking at the end of the Bankers’ Committee meeting in Lagos last week, Abdullahi said the outlook for the economy in 2018 is much better than 2017. The CRR is a portion of banks’ deposits kept with the CBN.

    According to him, the apex bank has been supportive of banks, adding that the Deposit Money Banks (DMBs) should be able to lend to companies that are doing new capital expenditures and expansions to factories using some of their CRR at nine per cent. These, he said, are not short-term loans but long-term facilities spanning seven year with two year moratorium on principal.

    Abdullahi said: “It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years which means they would be able to plan.

    “The volatility that they fear for all kinds of risks would be taken out and I think these are very laudable steps in improving and growing the economy.”

    The policy, it was learnt, was to have creating activities in the economy and also bring the interest rate low. Agriculture and manufacturing were the sectors initially targeted for such facilities, but job-creating sectors may now be considered.

    Abdullahi said: “The idea is that we can refund the CRR of a bank that has engaged in giving out loans to finance new projects or existing ones in the agriculture or manufacturing sector as a way of utilising the CRR.

    “So, anytime a bank lends to manufacturing or agriculture at the rate prescribed by the CBN, it would have its CRR refunded up to the amount it has given out. The guidelines are coming up any moment from now and once they do, it (policy) takes off.”

    Also speaking, Executive Director, Finance at the First City Monument Bank (FCMB), Mrs. Yemisi Edun, said the CRR taken from banks would be positively deployed to grow the real sector as well as the agriculture sector in the economy.

    Her words: “This is very positive for the economy and also positive for banks because we would be able to access these funds and earn on it. And because it would be coming at single digit rate, it would be positive for the economy.

    “For now, it would be channelled to agricultural sector and manufacturing for growth to enhance jobs’ creation. The focus is to ensure economy growth. Now that we have achieved stability, we need to see a positive trend of growth and that is what we are committed to do at this time.”

     

    CACS to the rescue

     

    Besides, its assurance of the CRR refund, the apex bank said the maximum interest rate to the borrower under the CACS shall not exceed nine per cent, inclusive of all charges.

    The apex bank approved the participation of all DMBs under the scheme. The participating banks have a mandate to sponsor projects from any of the target areas indicated in the guidelines and bear all the credit risk of the loans they will be granting.

    The CACS is being financed from the proceeds of the N200 billion, three-year bond raised by the Debt Management Office (DMO).  The fund will be made available to participating banks, to finance commercial agricultural enterprises.

    “The single obligor for any project from a participating bank under CACS shall be N2 billion while for state governments, it shall be N1 billion. However, for special schemes and programmes for agricultural development, state governments may be granted concessionary approval for more than N1 billion,” the CBN said.

    The scheme is expected to fast-track  the development  of  the  agricultural  sector  of  the local economy  by  providing  credit  facilities  to  commercial  agricultural enterprises at a single digit interest rate; enhance  national  food  security  by  increasing  food supply  and effecting  lower  agricultural  produce  and  product  prices,  thereby promoting low food inflation.

    CBN Governor Godwin Emefiele identified agric financing as the way forward for the economy. He explained that part  of  its  developmental  role, the CBN has in collaboration with the Federal Government, represented by the Federal    Ministry    of    Agriculture    and    Rural    Development    (FMARD), established  the  CACS for  promoting commercial agricultural enterprises in  Nigeria, which is a sub–component of the  Federal    Government’s Commercial Agriculture Development  Programme  (CADP).

    The fund, he added, will complement other special initiatives of the apex bank in providing concessionary funding for agriculture, such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small   scale farmers, Interest Draw-back scheme,    Agricultural Credit Support Scheme and other similar developmental initiatives.

    According to Emefiele, “there was no need to allocate scarce forex to rice importers when vast amounts of paddy rice of comparable quality produced by poor hard-working local farmers across the rice belts of Nigeria are wasted, and farmers are falling deeper into poverty at a time the government exports their jobs and income to rice producing in overseas countries.

    “Few decades ago, Nigeria was one of the world’s largest producers of palm oil but, today, we import nearly 600,000 metric tonnes while Indonesia and Malaysia combine to export over 90 per cent of global demand.

    “Under these circumstances, I believe it is appropriate, and in fact, expected, that the CBN contributes to protecting the jobs and incomes of local farmers, using some of the same principles Western economies use to justify the protection of their farmers through huge subsidies.”

    Noting that agriculture remained the largest employer of labour, the CBN chief said the sector contributes about 24.2 per cent of the country’s Gross Domestic Product (GDP).

    Emefiele described as unacceptable that the greatest share of the demand for forex goes directly to importing agricultural produce.

    He said: “So, the CBN has both a direct and indirect rationale to ensure that this sector is revived in a significant way. In this regard, we are gratified that the CBN’s Anchor Borrowers’ Programme (ABP), together with other initiatives like the CACS and Nigeria Incentive-based Risk Sharing System for Agricultural Lending NIRSAL, are proving to be successful in several states.”

    He explained that in Kebbi State alone, over 78,000 smallholder farmers cultivate about 100,000 hectares of rice farms. It is expected that over one million metric tonnes of rice will be produced in that state alone this year.

    He said: “And this is the bedrock of the recently-launched Lake Rice, which is an innovative partnership between the governments of Lagos and Kebbi states.

    “The CBN remains committed to do more in the identified crops such as rice, maize, sorghum, tomatoes, cassava, cocoa, cotton, dairy, and groundnut.

    “We also need to find ways to make land titling much easier especially for smallholder farmers. In this regard, the NIRSAL can assist with technical knowledge and deployment of relevant GIS and Satellite Imaging that will realise this within a short period.” Emefiele said at a workshop on innovative agricultural insurance products, in Lagos that the agricultural sector provides up to 70 per cent of employment in Nigeria and accounts for about 42 per cent of the country’s GDP.

     

    Bankers’ Committee

     

    The CBN and DMBs, under the aegis of the Bankers’ Committee, restated their commitment to expanding bank lending in agro-business in order to discourage importation of goods that can be produced locally.

    The bankers also stated their resolve to explore large corporates as anchors to lend to participants across the value chain to improve the capacity of Nigeria’s agro-businesses so as to create sustainable jobs and inclusive growth.

    The bankers affirmed their commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical finance of generation, provide finance for small and medium enterprises, among others.

    “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on Gross Domestic Product (GDP) and job creation, agriculture remains a critical focus sector of the financial system,” the Committee added.

     

    Agric potential

     

    Already, the commercial banks and the apex bank are in talks on how to increase lending to the sector. For the apex bank, the government must pay more attention to agriculture, which still has one of the greatest potentials in growing the economy.

    According to the CBN, one way of achieving the goal, is by collaborating with the banking system to fix the value-chain problems in the agricultural sector.

    Mrs. Edun said that economic development was about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments, which otherwise could hinder investment.

     

    NIRSAL performance

     

    According to the CBN, NIRSAL should be a catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

    The bank said: “The mandate of NIRSAL is to act as the custodian of all credit guarantee schemes, interest draw back schemes, and commercialisation initiatives related to an integrated value chain approach to agriculture and agribusiness in Nigeria.”

    Under NIRSAL, there are five pillars to be addressed by an estimated $500 million that will be invested by the CBN, according to the programme document.

    There is also a risk-sharing facility of $300 million, planned to address banks’ perception of high-risks in the sector by sharing losses on agricultural loans.

    There is equally an insurance facility of $30 million intended to expand insurance products for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance.

    Besides, there is also a Technical Assistance Facility (TAF) amounting to $60 million meant to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products, among others.

    The improvement in the sector was linked to access to credit through the new policy on increasing private sector participation, emphasis on the entire agriculture value chain, and using agriculture to boost employment, wealth creation and food security.

    Analysts commended the performance by the banks as a demonstration of their belief in the ability of agriculture to transform the economy. The CBN said that with the credit trend in the banks, Nigeria may be close to realising its economic diversification objectives.

     

    Role of the DMBs

     

    As part of its commitment to support agriculture businesses across the value chain and play its enabling role in the nation’s drive for economic diversification through agriculture, First Bank of Nigeria Limited held the second edition of its annual agriculture expo in Lagos. The theme of the expo was: ”Innovating for a sustainable green economy”.

    As a result of the expo, the First Bank’s agriculture portfolio recorded a growth of N11.65 billion as a direct impact.

    Agriculture & Rural Development Minister Audu Ogbe was the special guest of honour at the expo and Doyin Salami, a Senior Fellow/Associate professor and full-time Faculty member at the Lagos Business School delivered the keynote address on the theme of the day.

    Ogbe described the agriculture sector as vital with the recent National Bureau of Statistics fourth quarter, 2016 GDP growth rate of about four per cent, and a 24 per cent contribution to the economy.

    The minister decried the menace of foodstuff importation into the country, which he identified as a major threat to achieving self-sufficiency in food production.

    After opening the expo, the minister led other dignitaries, including Industry, Trade & Investment Okechukwu Enelamah, on a tour of the exhibition booths as he did in the inaugural edition. Enelamah delivered the goodwill message at the event.

    AFEX Commodities Exchange Country Manager Ayodeji Balogun, who spoke on “Reinventing agriculture for sustainable national development”, said that achieving the goal will require capital, talent and a high drive for productivity in the sector.

    He noted the need to rethink collaterised lending and consider structured trade finance for the agriculture sector.

    The Managing Director/Chief Executive Officer of First Bank of Nigeria Limited and Subsidiaries, Adesola Adeduntan, stated that his bank has over the years, committed to nation building, whilst promoting agric-business and the development of the economy in Nigeria.

    He said: “This second consecutive edition of the FirstBank agric expo is indicative of our commitment to increasingly collaborate with public and private sector partners to fully restore the prime role of the agricultural sector as the mainstay of our national economy.”

    The FCMB, Sterling Bank, Diamond Bank and United Bank for Africa have all renewed their pledge to intensify support to the agricultural sector and its value chain, including lending more to the subsector in the interest of the economy.

    The lenders insisted that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar – jointly account for a significant amount of the country’s annual import bill.

    They expressed conviction that the Nigeria has capacity to produce the identified items in required quantities to meet the population’s domestic consumption needs.

    With its attendant impact on the GDP and job creation, agriculture remains a critical sector of focus for the financial system.

    The banks said they remained focused on being the government’s strategic partners to other stakeholders in the agricultural sector to ensure food sufficiency, employment and revenue generation.

  • Agric financing raises hope of economic recovery

    Agric financing raises hope of economic recovery

    The Central Bank of Nigeria (CBN) and commercial banks are beginning to pay attention to agric-based businesses through micro-credit funding. Head of Agribusiness Department at the Union Bank of Nigeria Plc Olabode Abikoye speaks on the need for increased funding for the sector and how it can be turned to a major foreign exchange earner. He also speaks on the commitment of Union Bank to funding smallholder farmers expected to help the government reduce food imports valued at about N1 trillion annually, COLLINS NWEZE reports.

    The agricultural sector has recorded impressive growth in recent years despite the decline in the Gross Domestic Product (GDP) thanks to funding from the Central Bank of Nigeria (CBN) through commercial banks, Head of Agriculture Department at the Union Bank of Nigeria Plc Olabode Abikoye has said.

    He said the  sector recorded positive growth of above four per cent last year despite the decline in the oil and non-oil sectors, saying the sector thrived in terms of the GDP due to the government’s economic diversification which brought more funding to the sector at a time contributions from the oil sector have nosedived.

    “The Nigerian economy is import-dependent with very little non-oil exports. It relies substantially on crude oil and gas exports with other sectors trailing far behind. The economy is, therefore, susceptible to shocks in the oil and gas industry. In recent times, these shocks have been caused by either developments in the international crude oil market or unease in the Niger Delta region. Despite the challenges in the macro environment, businesses are increasing investments in mechanised farming and other activities in the agric value chain, such as processing, storage, packaging, delivery and logistics,” he said.

    Abikoye said foreign investors and investment fund managers have also raised their investment plans for the sector.

    “The renewed focus of the Nigerian Government on reviving productivity in the agric sector also contributed to this growth. The new Agricultural Promotion Policy (APP), Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) and other Agric-financing arrangement, have given farmers and businesses new impetus and opportunities for growth,” he stated.

    “Currently, Nigeria is rolling out ambitious reform programmes through the Ministry of Agriculture across its agricultural sector aimed at cutting the country’s dependency on food imports, creating jobs and generating growth. The reforms such as the move to privatise the procurement and distribution of fertiliser and seed have resulted in more private sector participation as well as increase in foreign direct investments, ”he added.

    Besides, the introduction of Agricultural Transformation Agenda (ATA) brought about reforms in the agricultural sector.  National food production grew and led to a sharp reduction in food imports. Also, direct farm jobs rose in the period due to ATA interventions.

    Other important point to mention here is that the government intends to reduce and eventually stop food importation. The cost of food importation is put at about N1 trillion annually.

    “Many private organisations have also diversified into the export market to earn foreign exchange following the prevailing scarcity of forex. Export of agro commodities is a low hanging fruit for prospective exporters and due to the opportunities presented by the devaluation of local currency, the sector witnessed new entrants which also accounted for part of the growth,” he stated.

    Abikoye said there was no evidence of improved forex liquidity, and the forex shortage still one of the key constraints on activities in Nigeria.

    He added that Union Bank is unrelenting in the provision of funding support and technical advisory services to Micro Small and Medium Scale Enterprises (MSMEs) and Commercial agribusiness projects.

    He said Union Bank’s active engagement in agro-commodities value chain financing is hinged on the fact that the benefits of agriculture is becoming more visible, and the sector has  huge potentials to become a major foreign exchange earner and help boost the nation’s revenue base. Across the country, our farmers, traders and transporters are seeing a shift in their fortunes. Nigerians who favoured imported products are now consuming made-in-Nigeria products.

    “If there is any time to take a serious look at financing the growth of the sector, even as the nation moves away from over dependence on oil, it is now. Our development partners – CBN, NIRSAL, NAIC have been supportive over the years as regards providing the enabling on-lending support for qualitative boost in Union Bank’s agribusiness risk assets portfolio. Our team possesses the requisite skills set to actively function in the specialised sector – in areas such as relevant trainings in agro-commodities value chain financing, technical appraisal of credit requests, project monitoring and evaluation, enabling us make risk-conscious and purposeful decisions,” he said.

    On projection for the agric sector within this year, Abikoye said that as the country aims to diversify, agriculture is expected to play a key role in growing the non-oil sector in the coming years.

    “The growing demand for food driven by a large population ensures the demand for agricultural produce remains high. However, policies over the medium and long term will influence the growth and development of the industry. However, there is need to deepen government intervention policies as well as increase public and private partnerships for investments in the sector to end food importation and encourage exportation.

    “Our small-and medium-scale businesses continue to face difficulties in accessing long term and more affordable credit. Most stakeholders are of the opinion that the criteria set to access the government intervention funds (loans either by the CBN or direct from the Federal Government) are seemingly unrealistic. The conditions are said to be too stringent for the consciously marginalised low-scale farmers, who constitute over 80 percent of the country’s farming population,” he suggested

    According to Abikoye, government also needs to address the issue of lack of land title documents by farmers. “The state governments must see reason to make land available to potential farmers for the purpose of achieving the goal of food security. A few suggestions on how we can create an enabling environment for agriculture to thrive  include improving farm storage facilities and improving infrastructure, increased investment to make the sector more attractive to young people, and increased funding intervention by the Federal Government and the CBN,” he said.

    He advised that to achieve self-sufficiency in food and other farm products, considerable work needs to be done across the various value chains. “In December 2016, Morocco and Nigeria signed an ambitious collaboration agreement to revive the abandoned Nigerian fertiliser blending plants. The agreement focuses on optimising local materials and only importing items that are not available locally. This programme has already commenced and it is expected that it will create thousands of jobs and save Nigeria $200 million of foreign exchange and over N60 billion in subsidy. An increase in such arrangements are required for the sector to progress.

    “The agriculture sector has huge potentials to become an alternative foreign exchange earner. However, the key issues remain unreliable power supply, export incentives, and access to finance. We must take advantage of current opportunities to export processed agricultural products and manufactured goods. Expansion of existing, as well as the development of new Export Processing and Special Economic Zones in partnership with the private sector is recommended,” he stated.

    Abikoye said that sustained decline in production levels, new orders and raw materials inventories are responsible for the decline in credit to agric sector in 2016 even as global growth remained uneven as the risks remain tilted to the downside.

    He attributed the decline to the fall in banks’ holding of government securities which had a negative bearing on domestic credit to private sector like financial resources provided to the private sector through loans, purchase of non-equity securities, trade credits and other account receivables that establish a claim for repayment.

    He believes that for the Nigerian economy to achieve greater growth in the future, the financial industry must be encouraged to serve the real sectors while corporate bodies should be encouraged with favorable government policies, to give agriculture the oxygen it needs to thrive by sourcing a greater percentage of raw materials utilised locally in the nearest future.

    “Apart from driving down costs for the manufacturers and ease, the pressure on the nation’s dwindling foreign reserves, local raw materials sourcing will also play an important role in creating employment opportunities, boost income levels and empower farmers along the agriculture value chain. Building strategic partnerships with banks, agricultural non-governmental organisations, donor agencies and research organisations and leveraging these partnerships to mitigate some of the challenges that currently affect the agro-commodities value chain will take the agricultural industry to the next level and meet the funding needs of the stakeholders,” he advised.

  • Agric financing now the way to go

    Agric financing now the way to go

    The government is making agriculture the mainstay of the economy, following the falling oil prices. The Central Bank of Nigeria (CBN), through banks, has injected N23 billion into the Anchor Borrowers’ Scheme (ABS), an agriculture initiative to grow rice. This month, the Bankers’ Committee plans to float a N30 billion Agric/SME Fund. These initiatives are expected to raise agric financing and dominate banking this year. COLLINS NWEZE writes that banks with eyes on the future are looking beyond oil sector accounts to businesses that fall within the economic diversification agenda.

    Many Nigerians are beginning to understand that locally-produced rice tastes better than its foreign counterparts. This was after the Central Bank of Nigeria (CBN) committed over N23 billion to the Anchor Borrowers’ Scheme (ABS), which empowered local farmers with cash and seedlings to raise their output. Besides, there are standby rice millers ready to buy the produce off them.

    There is also the N30 billion  CBN-backed Agric/SME Fund (AGSME Fund) which will be launched in collaboration with commercial banks before the end of this month. The fund, the CBN said, would enable commercial banks to grant credit to those interested in primary agriculture and Small and Medium Enterprises (SMEs) businesses.

    CBN Governor Godwin Emefiele, said at the end of the 8th Bankers Committee’s meeting in Lagos that the AGSME Fund be funded from contributions by banks.

    Besides, the ABS, Emefiele said, was launched in 2015, as an innovative way of improving access to finance for farmers and manufacturers.

    Together with other initiatives like the Commercial Agriculture Credit Scheme and Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), the ABS is recording success in several states. “To date, CBN has committed close to N23 billion in the ABS which 14 states are participating. In Kebbi State, over 78,000 smallholder farmers are now cultivating about 100,000 hectares of rice farms. It is expected that over one million metric tonnes of rice will be produced in that state alone this year,” he said.

    Emefiele said that the role of returning the economy to normalcy has been placed on banks as their financial intermediation activities cut across all sectors.

    Beyond the CBN, banks with eyes on the future know where to put their money. Many of them have identified the agric sector and its value-chain as a key area to play in this period of deposit drought and reduced profitability. Already, farmers are seeking more credit to expand to meet the increasing needs of local consumers.

    For the Chairman, Tractor Owners & Hiring Facilities Association of Nigeria (TOHFAN), Alhaji Danladi Garba, now is the time for banks to grant more credit to farmers and see the impact of improved food production, not only on employment market but on the economy.

    At a media forum on agriculture financing in Lagos, tagged: “Agric Business: Diversifying the Nigerian Economy,” the farmer said Nigeria could produce food, noting that agric business is profitable.

    He is probably right. Gone are the days when borrowers beg banks to lend to the agric sector. Today, the tides have changed. The buzz for agric financing is on, and no lender wants to be left behind.

    Ten years back, no lender would give depositors’ funds to a farmer. Such loans would be considered lost from the date of approval. But today, the lenders have begun to scramble for agric businesses, having seen the potential, and knowing how much a well-priced loan can add to their profitability, many lenders are keying into the agriculture financing scheme.

     

    CBN’s intervention policies

    Besides, with the intervention policies of the CBN, which are extended to the target populace through the lenders, there is added role for the financial institutions in evolving innovative approach to the nation’s development agenda.

    The CBN noted that at a critical time in the country’s history, the emphasis on diversification and support for its achievement must be accorded priority by bankers.

    At the retreat with the theme; “Economic Recovery: The Role of the Banking Sector,” the governor reiterated that banks must come up with innovative solutions that will enable the finance sector play a key role in driving Nigeria’s growth and development.

    “The focus on economic recovery by bankers is timely, given the sustained external headwinds we are grappling with, triggered by several factors. Chief of such is the 70 per cent plus decline in the price of crude oil between June 2014 and June 2016. With over 90 per cent of our export revenues coming from the sale of crude oil, the drop in its prices along with the end of quantitative easing programme in the United States has led to a huge impact on our economy, particularly in the foreign exchange market,” he said.

    According to him, emphasis is now placed on creating an enabling environment for a more diversified growth structure that is not dependent on the sale and production of one produce – crude oil.

    He said that the new move dwells on improving the productivity of farmers, manufacturers and firms, as well as their access to finance, in order to produce goods and services that can be made in Nigeria. This will improve job creation and growth for the nation as a whole.

    The committee reiterated that two key sectors are central to the recovery efforts – agriculture and the manufacturing sectors.”They are recognised worldwide as catalysts for rapid growth, job creation and poverty reduction. Agriculture, for example, remains the largest employer of labour in Nigeria and contributes about 24.2 percent of our GDP.  For quite some time now, funding the necessary investment required for the transformation of the agriculture and manufacturing sectors has become a major priority of the CBN,” it said.

     

    N30b Agric/SMEs Fund

    The project guidelines, he added, will be announced in the coming days, but the computation of each bank’s contribution to the fund may be delayed until the 2016 results of DMBs are released around April 2017.

    Emefiele, who is also the Chairman of Bankers’ Committee, said: “The modality for the fund which will operate as an equity fund will be worked upon by the Bankers’ Committee and communicated in due course. The main call of what we agreed at the meeting is that the CBN, together with the banking sector, establish an Agric/SME Fund from contributions from portion of profit after tax of deposit money banks. As a deliberate strategy, we support the funding and access to finance by helping those who are interested in primary agriculture and SME businesses”.

    He said the modality for the funds, which will operate as an equity fund, will be worked out by the Bankers’ Committee and communicated in the next few days to the public.

    “We thought that need to stimulate growth, and we understood that having equity funds is key in making success of the project. The CBN has decided that certain of the banks’ profits will be committed as equity funds to support the project. The CBN will continue to, through deposit money banks and other financial institutions provide loans to SMEs at a single digit interest rate. The Bankers’ Committee will continue to focus on capacity building, a deepening awareness of funding plans for the SMEs,” he said.

    He said that level of accessing the loan is not low, but it is the responsibility of the banks to determine whether a project is viable or otherwise, and the viability of a project will determine if the loan will be approved or not.

    “

    All eyes on non-oil export

    CBN Director, Research and Development, Dr. Uwatt Uwatt said banks remain engine block of the economy and is doing everything possible to boost economic recovery.

    Speaking on  the plans to diversify the economy away from crude oil, he said there is need to reduce the cost of loan-able funds to non-oil exporters as such would raise production volumes and boost the country’s foreign exchange earnings.

    He explained that to check this trend, the apex bank canvassed for improved cheaper credits to everyone on the agric-value chain and also introduce the NIRAL scheme to de-risk agric lending.

    He also said the N200 billion Commercial Agricultural Credit Scheme and N220 billion Micro, Small and Medium Enterprises (MSMEs) were also instituted to enable small businesses access cheap funds.

    Uwatt, who spoke on the theme: ‘Overview of non-oil sector in Nigeria’, said the drop in prices of crude oil in international markets has rekindled the need to revamp the non-oil sector. “Declines in global crude oil prices have triggered major headwinds for the economy. Continued dependence on oil poses a big threat to economic stability.The nation is now trying to retrace its steps from over dependence on oil for major part of its revenues,” he said.

    Also, the Chairman, Ebony Agro Industry Limited, Charles Ugwu, equally praised the CBN for sustaining rice milling business in the country.

    He spoke during a media visit to his mill in Ikwo Local Government Area of Ebonyi State. He recounted that Ebony Agro Industry was one of the several rice mills established by the Federal Government in 2008 due to the recorded food shortage occasioned by the global economic meltdown. He added that due to policy reversal and challenges of infrastructure such as power, road and finance, only four of the 17 proposed mills were eventually established.

    Ugwu further said that the stringent measures put in place by commercial banks on loan procurement had scuttled the project but for the intervention of the CBN. He praised the CBN for providing the start up funds through the agric credit scheme and the Anchor Borrowers Programme which are helping farmers to realise their dreams.

  • AFRACA praises Union Bank’s agric financing role

    AFRACA praises Union Bank’s agric financing role

    Stakeholders in the Agricultural Sector have commended Union Bank Plc for investing heavily in rural agriculture and being in the forefront of implementing most of the Federal Government policies on Agriculture to ensure food security in the country.

    The lender received these praises in Abuja at the two-day Nigerian Finance conference with the theme “Catalysing the Diversification of the Nigerian Economy through Effective Agricultural Finance”. The event was organized by African Rural and Agricultural Credit Association (AFRACA).

    The representative of the Central Bank Governor who is also the Deputy Governor Corporate Services, Adebayo Adelabu said that investment in Agriculture generates four times poverty reduction variables than any other sector, adding that commercial banks have in the past shied away from investing heavily in Agriculture because of the unpredictable nature of the Sector as draught and even excessive rains could turn the tide and put the banks at risk from scooping their investments in record time.

    Managing Director, Union Bank Plc. EmekaEnuwa reiterated the need for more funding of the Agric sector especially under the platform provided by AFRACA saying that most of the African countries are facing the same dwindling fortune like Nigeria.