The need for the success of the
Agricultural Transformation Agenda(ATA) is tied to the ability of both
agricultural and commercial banks to support the initiatives of the federal
government. Ruth Tene Natsa writes on the need to ensure that farmers get
access to banking loans set aside for agricultural purposes.
The Federal Government through
the its Ministry of Agriculture and Rural Development (MARD), with support from
the Ministry of Finance and the Central Bank of Nigeria (CBN), in 2011/2012,
created the Fund for Agricultural Finance in Nigeria (FAFIN) as well as the Nigeria
Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) among
many other initiatives to create soft loans to small holder farmers seeking
loans.
The loans, which are to be
managed by the Bank of Agriculture with support from other commercial banks, is
supposed to be made available to farmers at single digit interest rates.
However, this is not the case as alleged by many farmers who have at one time
or the other sought for such loans, especially from the commercial banks.
There is no gainsaying that the
banks, particularly the commercial banks, are in the business for profit making
but in line with the vision of the Agricultural Transformation Agenda (ATA),
which seeks to partner with the banking sector, the banks may have to give out way
more than they are willing to before enjoying their benefits.
While the federal government
believes that the banks are willing to give loans to farmers at single digit
interest rates, this may not be so as farmers from various platforms claim that
banks request double digit interest rates, some as high as 24 per cent.
Unfortunately, this defeats the
purpose for which the partnership is sought between the federal government and
the banking sector. In the words of president general, Agbekoya Farmers Association,
Kamorudeen Okikiola, “No Nigerian farmer had been able to access the N15
billion promised by the government to the Bank of Agriculture (BOA).”
Speaking with journalists at
the 2nd Farmers’ National Conference, which held with the theme, ‘Financial Risks
and Agricultural Funding in Nigeria’, he said, “They are giving us 24 per cent
bank interest, which no commercial farmer can take, except it is a single
digit. So we have to call the BOA and the CBN to let them know the truth of
what is happening with the Nigerian farmer. At different states, where they
called for single digit, the farmers have been unable to access the loans. For
example, the Farmers Association brought all the necessary documents requested
over 18 months ago and till now all we get are promises from the banks.
“So saying Nigerian farmers can
produce a lot of food for the Nigerian people, is a lie because Nigerian
farmers are still very poor.”
National financial secretary
and secretary to the electoral committee of the All Farmers Association of
Nigeria, Dr. Tunde Aronsanye, opined that less than 20 per cent farmers had
been able to access any form of agricultural loans as they are constrained by
many reasons including the requests for seed money required to open an account
either as an individual or as a cooperative. He said, “And one is expected to
run such an account for a period of 3-6 months before the farmer can obtain a
loan form and he is also expected to have 10-20 per cent deposit and in most
cases the farmers are expected to make several trips to the bank because most
of these banks are not in the farming communities. In the end, most farmers
just chose to use the little they have to farm what they can rather than
putting such money in the bank for a period of 3-6 months, when they are not
even sure of getting the loans. All these stresses militate against the farmers
who are domiciled in the rural areas. Some of them have tried in the past and
gave up when it did not work out. So government must look for a less stressful
way to package our food security program to make it easily accessible to our
peasant farmers”.
Meanwhile, the minister of
Agriculture and Rural Development, Dr Akinwumi Adesina, said that lending to
farmers has increased considerably. He provided details, “Bank lending to the
sector increased from 2 to 4 per cent of total lending. Banks’ lending to the
GES program increased from N 3.5 billion to N 25 billion between 2012 and 2013.
“The CBN with the facility it
has with NIRSAL is helping to derisk the financial value chain and we in
agriculture are fixing the agricultural value chain.”
The minister, who is opposed to
double digit interest rates, told LEADERSHIP, “If anybody is in agriculture and
tries to borrow money at 24 per cent interest rate, one can never make a
profit. But that also depends on where you are borrowing from. If you borrow at
such rate then maybe you are dealing in drugs, because if you look at other
countries, American farmers since about 1865 have been borrowing money at 4 per
cent interest rate. Europeans subsidize their farmers expenses. I believe that
agricultural loans should be provided at single digits interests rates because
of the risk and the fact that majority of the farmers that are there need money
and also because the loans they are looking for are not just short term loans.”
Source:
http://leadership.ng/business/376131/accessible-agricultural-loans
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