Seeks 10% funding by 2024
Disburses N69bn COVID-19 loans to 140,000 households, MSMEs
Manufacturers access N255bn, Health gets N45bn
BY COBHAM NSA – Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, says the banking sector must urgently increase its funding of the agriculture sector to support and engender sustainable economic development and growth in the country.
He said the banks have to up their game to about 10 per cent funding capacity by year 2024 because the current four per cent intervention remains grossly inadequate.
Emefiele, who spoke at the 13th Annual CIBN Banking and Finance Conference on Tuesday, said; “Over the next four years, the banking sector should consider ways under which it could increase its loans to the agriculture sector from four per cent to 10 per cent by 2024.”
Put together by the Chartered Institute of Bankers of Nigeria (CIBN), the conference, with the theme: “Facilitating a Sustainable Future: the Role of Banking and Finance”, had the CBN governor urging banks to explore existing opportunities in the agricultural sector by addressing noticeable gaps in the value chains.
According to him, areas requiring urgent intervention include storage centres; transport logistics; and technology platforms that can assist rural farmers sell their produce directly to the markets.
“If measures had not been taken earlier to improve cultivation and processing of staple crops in Nigeria prior to the onset of the pandemic, we would have had to deal with a major food crisis in the country.
“The banking sector, therefore, has a significant role to play as a facilitator of growth through its intermediation function”, Emefiele said.
For him, the agric sector offers huge opportunity for Nigeria to earn foreign exchange through exports of processed agricultural products, noting that declining forex earnings from crude oil demands the banking sector explore other options such as funding support for export-oriented agro-processing firms.
He explained that such moves would not only help improve the productivity of farmers, but also increase the nation’s foreign exchange earnings; reduce post-harvest losses; increase access to finance for farmers while supporting growth in other sectors of the economy such as manufacturing and transportation.
Furthermore, the CBN boss said despite several challenges to the economy as well as the banking industry, COVID-19 is offering the country a unique opportunity to build a more resilient economy to robustly contain external shocks, while supporting growth and wealth creation in key sectors of the economy.
He also challenged stakeholders in the banking and financial system to embrace proactive steps that support growth of agriculture, ICT and infrastructure development, adding that such arrangement Nigeria’s capacity to handle existing and emerging challenges arising from the deadly COVID-19 while stimulating needed growth of the economy.
On CBN’s COVID-19 interventions, Emefiele said about N69 billion has so far been disbursed to over 140,000 beneficiaries from the N100 billion CBN COVID-19 support loans for households and MSMEs.
Similarly, the CBN Governor said about N255 billion has been given out to beneficiaries from the N1 trillion intervention fund to the manufacturing sector to help stimulate economic activities to douse the impact of the pandemic in output.
Emefiele said these are in addition to about N45 billion also disbursed to pharmaceutical companies from the N100 billion intervention fund for the nation’s health sector.
However, Emefiele, in acknowledging continuous growth in the banking and finance sector in the second quarter of the year as encouraging, said the financial system’s ultimate strength substantially depend on three key pillars.
He listed the trio as: Ensuring that banks have adequate capital buffers to withstand similar pandemics; Developing adequate internal controls that will be able to identify potential risks and putting in place measures to contain that risk; and Being able to adapt your business model to changes taking place in the business environment.
The apex bank Chief however stressed that the last point remains largely “vital as COVID-19 has demonstrated the impact externally induced disruptions could have on the Nigerian economy.”