CBN To Raise Lending Profile To Agric Sector

The Central Bank of Nigeria (CBN) may raise the profile of commercial banks leading to agricultural sector from three to ten per cent in the next five years going by hints from the Nigeria Incentive Risk Implementation office (NIRSAL).

Head of the NIRSAL, Jude Uzonwanne who made the disclosure in an interview with newsmen in Enugu recently said as an agro-based business financing arm of the apex bank was established more than a year ago to respond to challenges identified in agriculture over the past 20 years.

He said the aim was to address the challenges and boost food production, adding that the programme was in partnership with CBN, the commercial banks, ministries of agriculture, finance, trade and investment.

He said the programme cold achieve the set target in less than five years based on the successes recorded so far. Uzonwanne pointed out that N75bn was set aside as lending capital for agriculture to farmers in the country out of which N45bn would be used as risk fund to issue guarantee to banks in case of any loan default by farmers.

“So roughly the ratio is that for every one naira in guarantee that we issue to a bank that triggers about ten naira in loans.

“So based on the size of our guarantee fund today of N45bn, it means that banks can comfortably lend N450bn in agricultural loans which is roughly based on our calculations.

“Every circle, Nigerian farmers and agric business companies require roughly about N500 to N600bn in loans and so with the capacity we have today, we can comfortably cover through commercial lending all of the loan requirements for banks” he said.

He explained that the fund which would be market-driven would cover all aspects of agriculture from input procurement to technical advice; extension workers, provision of rural infrastructure, processing and ensuring that farmers had access to market for their produce.