CBN, Banks Set Aside N300bn For Agricultural Lending In 2016
… Plans To De-risk Agric Value Chain
BEVERLY HILLS, December 13, (THEWILL) – In an effort to grow and diversify the economy from oil, the Central Bank of Nigeria (CBN) and the Deposit Money Banks (DMBs) have set aside N300 billion for agricultural lending next year.
To achieve this objective, the Bankers' Committee plans to de-risk the agricultural value chain.
The targeted fund would accommodate not only the small and medium enterprises (SMEs), also large-scale farming; companies in the agricultural sector, Godwin Emefiele, governor of CBN, said at the end of the seventh Annual Bankers' Committee Retreat, held in Lagos.
He explained that the increase in lending to the agric sector would translate to reduction in the demand of foreign exchange that would help conserve Nigeria's foreign reserves and strengthen its currency.
Beside the need to support the agric sector, he added that the committee deliberated on the need to help support government's effort to boost SMEs and infrastructure – power and transportation, employment of young graduates and diversify the economy from oil.
Addressing the media after the retreat, he said the banking industry, rising from the two-day retreat generally agreed to increase lending to the agric sector, following meetings with ministers for finance, agriculture and rural development, power, works and housing, solid minerals and others.
“Part of the issue is how to increase support for agriculture value chain, what the various stakeholders need to do in order to encourage banks to grant credit facilities to the agricultural sector so as to stimulate growth. How and what should be done to develop large-scale commercial farming in Nigeria in order to boost agricultural productivity,” he said.
The Bankers' Committee also looked at financing of SMEs, which they recognised there was need for paradigm shift in the feeling that SMEs were endangered sector to lend money. The committee also recognised that the BVN would help in creating a pool of SMEs loans in the country, and however agreed on the need to take identified SMEs through capacity building, skills such as how to keep records and run their businesses. This will help to make the SMEs more bankable, they said.
Emefiele noted that the previous outcomes of Bankers' Committee had helped to increase lending to manufacturing sector, facilitate finance to the power and aviation sectors, and incentivise lending to the agricultural sector.
He, however, stressed on the need to get more people to be employed through the support of the banks to begin to see how they can lower its risk acceptance criteria to give support to young graduates.
“Banks agreed to support all efforts of government to boost employment of young graduates in the country. In the area of infrastructure, the banks identified power, transportation and other part of infrastructure as strong enablers and drivers of growth in the economy.”
“They agreed to play their part to support financing of power and transportation infrastructure but all hands should be on deck not just from the side of monetary authorities but fiscal authorities,” Emefiele said.