BY CHINYERE OBIORA, LAGOS – Heritage Bank Plc has tasked government at all levels and Deposit Money Banks (DMBs) on enhanced support to agriculture given its critical position as the most resilient and important sector of Nigeria’s economy.
According to the bank, increased focus on growing the nation’s agric sector will promote the job creation objectives of the Economic Recovery and Growth Plan (ERGP) of the current administration.
Executive Director of the bank, Mr Jude Monye, who spoke at the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) 2018 Chief Risk Officers Forum Retreat in Lagos, said given its labour intensive process across the value chain, the sector’s potential to create multiple jobs, create wealth, improve contributions to GDP and foreign exchange earnings are enormous.
In a presentation on ‘Bank Experience in Lending to the Real Sector (Agric) of the Economy’, Mr Monye noted that despite underwhelming investments in agriculture over the years, the sector still holds the key to Nigeria’s socio-economic growth and development.
He blamed the sector’s under-performance on poor credit access from banks as well as lack of continuity in government policies and programmes.
The Bank chief also decried the under-funding of Nigeria’s Agricultural research institutes established to drive the sector’s business, noting that compared to India and other climes where agriculture thrives as a major contributor to the nations’ GDP, Nigeria’s position pales into insignificance as to encourage any appreciable level of growth.
“The 2018 budget allocates N54bn and N149bn (US$490m) to the Agriculture and Rural Development Ministry for recurrent and capital spending respectively.
“Agricultural research institutes have received an average of N28bn (US$90m) annually over the past five years. The comparable figure for India, with six times the population, is closer to US$2bn,” he said.
Monye however applauded government’s economic recovery and growth plan that is heavy on Agriculture and MSMEs as key drivers of the economic diversification plan.
“Successful implementation of the Government’s Recovery Plan provides significant opportunities for entrepreneurs, investors and financiers – particularly in the Agro-allied Sector,” he said.
The Executive Director insisted that investments in infrastructure (energy and transportation) would support Agric-led growth, adding that efforts must be focused on exploring options for de-risking and unlocking bank lending to the Agric sector to develop and position it for increased contribution to the Nigeria’s GDP and revenue profile.
For him, there is need to sustain regulatory driven intervention funds for increased access to credit at single digit rates and long tenors, improve knowledge of Banks and Bankers on Agric finance and Agricultural Risk Management through focused capacity building among others.
Also addressing participants at retreat with theme, ‘Achieving Economic Diversification for Nigeria via the De-Risking of Lending to the Nigerian Non-oil Sectors’, Managing Director and Chief Executive Officer of NIRSAL, Aliyu Abduhameed, said value chain financing is one of the major challenges currently facing Nigerian agricultural sector.
He explained that NIRSAL is promoting the policy by ‘de-risking’ the agricultural financing value chain; building long-term capabilities; and institutionalizing agricultural lending through risk sharing with banks; technical capacity building as well as the provision of incentives to encourage bank lending.
He said Nigeria is endowed with all the natural resources to thrive in agriculture, but the sector lacks the required capital to maximally meet the opportunities.
He said NIRSAL therefore aims to increase Deposit Money Banks’ lending and other private investments in the sector.
Abduhameed hinted that a proposal is currently before the Central Bank of Nigeria (CBN) for NIRSAL to be recognised as collateral instrument as well as flow instrument, stressing that the development would fast track the de-risking of the value chain financing.
In his intervention, one of the panelists and Group Executive Director, Agribusiness TGI Group, Farouk Gumel, stressed the need to shed more light on banking agriculture rather than de-risking.
He also wants appreciable investments in infrastructure as well as timely measures to address eco-climate system in the country.
