Monday 14 December 2015

CBN and Banks pledge to increase lending to Agricultural sector to N300bn

The Central Bank of Nigeria (CBN) and commercial banks in the country, under the aegis of the Bankers’ Committee have agreed to increase lending to the agricultural sector to N300 billion in 2016.

This formed part of the communiqué at the end of a two-day seventh Bankers’ Committee retreat titled: ‘Creating an Enabling Environment for SME Growth,’ that took place in Lagos at the weekend.

CBN Governor, Mr. Godwin Ifeanyi Emefiele, while briefing the media, said banks generally agreed to increase lending to the agricultural sector, adding that the committee however felt there was the need to de-risk the agricultural value chain.

He said efforts by the Bankers’ Committee had helped to incentivise lending to the agricultural sector, even as he pointed out that lending to the sector increased from as low as one per cent in 2010/2011, to four per cent in 2014/2015.

According to Emefiele, the committee also stressed the need for the monetary and fiscal authorities to work together in a collaborative manner to achieve the objective of improving local production of specific agricultural products, so that as a result of an increase in lending to the sector, the nation would begin to see a reduction in the demand for foreign exchange to help conserve foreign exchange reserves and strengthen the naira.
“Banks feel that there is a need to improve the level of infrastructure in various sectors. For instance, by building more Fadama roads, more silos and warehouses to receive final produce, so that products don’t get destroyed at the farm. We should have Fadama roads to make it easy for goods to be transported from the local communities to areas where they could be sold to increase the wealth of those in our local communities.
“Of course we all know that the central bank has the Commercial Agriculture Credit Scheme, which has been substantially disbursed, but with the N300 billion lending to the sector, we are talking about a combination of fresh lending, not just from the CBN, but also the commercial banks using some of their liquidity to also fund agriculture. That is why we are talking about removing the risk elements across the value-chain so as to make everybody, including the banks comfortable to lend to the sector,” the CBN governor explained.
The retreat was also attended by the Lagos State Governor, Mr. Akinwunmi Ambode; ministers of Agriculture, Chief Audu Ogbeh; Power, Works and Housing, Mr. Babatunde Raji Fashola; Transportation, Mr. Rotimi Amaechi; Solid Minerals, Mr. Kayode Fayemi; Finance, Kemi Adeosun, as well as practitioners in agricultural, power and small business sectors.

Previous bankers’ committee retreat, according to Emefiele, had helped to increase lending to the manufacturing sector and in facilitating finance to the power and aviation sectors.
Furthermore, he said the purpose of the retreat was to discuss how to support government’s efforts at diversifying the economy in the face of the sharp drop in oil prices.
“Banks also looked at financing SMEs. The recognised that there is a need for a paradigm shift in the feeling that SMEs are in an endangered sector. Banks recognised that the Bank Verification Number would assist in creating a pool of SME loans in the country. We however agreed that there is a need to take identified SMEs through capacity building in skills in record keeping and how to run their business. This, we believe would make the SMEs more bankable.

“Banks agreed to support all efforts of government to boost employment of young graduates in the country. Of course in the area of infrastructure, banks identified power, roads, as strong enablers and drivers of growth in the country.
“Banks agreed to play their part in supporting power and financing of other infrastructure, but that all hands should be on deck, not just from the monetary authorities, but also from the fiscal authorities, to boost power, transportation so that we can achieve the goal of growing the economy,” he said.

Credit: ThisDay

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