The Central Bank of Nigeria (CBN) and the deposit money banks have set a N300 billion target to boost agricultural lending in 2016 as part of ways to grow the economy and diversify from oil.
Governor of CBN Godwin Emefiele explained at the end of the 7th Annual Bankers’ Committee Retreat that the targeted fund would accommodate not only the small and medium enterprises (SMEs) but also large-scale farming companies in the Agriculture sector.
He said that the banking industry, rising from the two-day retreat, generally agreed to increase lending to the agriculture sector following meetings with ministers for Finance, Agriculture and rural development, Power, Works and Housing, Solid Minerals, among others, although the committee felt that there was the need to de-risk the agriculture value chain.
“Part of the issue is how to increase support for the agriculture value chain, what the various stakeholders need to do in order to encourage banks to grant credit facilities to the sector so as to stimulate growth, and how and what should be done to develop large scale commercial farming in Nigeria in order to boost agricultural productivity,” he explained.
In achieving maximum result in the sector, the CBN governor said that the Bankers’ Committee considered it apt that monetary and fiscal authorities work together to achieve the objective of improving local production of specific agricultural products like rice, tomatoes, wheat, sugar, fish, to mention a few.
According to him, the increase in lending to the agriculture sector will translate to reduction in the demand of foreign exchange that would help conserve Nigeria’s foreign reserves and strengthen the currency. He further noted that beside the need to support the sector, the committee deliberated on the need to support government’s effort to boost SMEs and infrastructure, power, transportation, employment of young graduates and to diversify the economy from oil.
“The Bankers Committee also looked at financing SMEs and recognised that there is need for a paradigm shift in the feeling that SMES are an endangered sector to lend money. It also recognised that BVN will help in creating a pool of SMEs’ loans in the country, but agreed that there was the need to take identified SMEs through capacity building and skills such as how to keep records and run their businesses.
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