Respite might be coming to Nigerian farmers finally. The Federal government said it is perfecting its plans to recapitalise the Bank of Agriculture with about NGN1 trillion (approximately USD3.2 billion).
As disclosed by the federal minister of agriculture and rural development, Audu ogbeh, he told pressmen that the new agriculture bank will also provide basic banking services such as acceptance of deposit from millions of farmers across the country.
The most interesting part of the proposal is that the bank will provide loans at half the average lending rate in the banking system. This means farmers and agriculture investors will borrow with less than 10% interest rate.
According to information on its website, the Bank of Agriculture Limited was incorporated in 1972 as Nigerian Agricultural Bank (NAB), in 1978, the name was changed to Nigerian Agricultural and Co-operative Bank Limited (NACB) to reflect the inclusion of co-operative financing into its broader mandate.
The Bank is wholly owned by the Federal Government of Nigeria with its shares held by Central Bank of Nigeria, CBN (40%) and Federal Ministry of Finance Incorporated (MOFI) (60%). It is supervised by Federal Ministry of Agriculture. It has an Authorized Share Capital of NGN50 billion.
While the impact of the bank has not been felt, it claimed that it has strategic partnership with USAID, IFAD, World Bank, African Development Bank (AfDB) and ECOWAS Bank for Investment and Development (EBID).
The Bank of Agriculture disclosed that it has 136 outlets, 6 Zonal Offices and the Head Office, spread across the 36 States of Nigeria and the Federal Capital Territory. It is therefore puzzling how the federal government will increase the reach of the bank should it be keen at covering many farmers as possible.
High interest rate fuelled by skyrocketing inflation has alienated Nigerian farmers from the conventional lending system that are prohibitive and unrealistic for farmers to cope with.
At the last monetary policy committee meeting, the CBN retained headline interest rate at 14% citing the uncontrollable inflationary pressure and Forex scarcity that has further put pressure on the country’s foreign reserve.