An Executive Director at Heritage Bank Plc, Mr. Jude Monye, has called on government at all levels and deposit money banks to increase their supports to the agricultural sector, as it is the most resilient and important sector of Nigerian economy, despite underwhelming investment in the sector.
Monye stated this while delivering a paper, titled, “Bank Experience in Lending to the Real Sector (Agric) of the Economy,” at the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) 2018 Chief Risk Officers Forum Retreat, in Lagos, at the weekend.
He disclosed that increased focus on the agricultural sector would contribute to the job creation objectives of the Economic Recovery and Growth Plan (ERGP), as its labour intensive process across the value chain has the potential of creating multiple jobs, create wealth, and increase the sector’s contribution to GDP and foreign exchange earnings.
He also stressed that the under-performance of the sector was closely tied to other factors including poor credit access from banks.
On the part of government, he decried that Nigeria’s Agricultural research institutes that are established to drive the sector’s business were underfunded compared to India’s.
“The 2018 budget allocates N54billion and N149billion (US$490m) to the agriculture and rural development ministry for recurrent and capital spending respectively.
“Agricultural research institutes have received an average of N28billion (US$90m) annually over the past five years. The comparable figure for India, with six times the population, is closer to US$2 billion,” he stated.
He further noted that the Economic Recovery and Growth Plan (ERGP) of the government was 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,” Monye affirmed.
The Executive Director added that investments in infrastructure (energy and transportation) are supportive of the Agric-led growth.
He explained that to explore options for de-risking and unlocking bank lending to the Agric sector so as to develop and position the sector for increased contribution to the Nigeria’s GDP and revenues, there is need to Continue regulatory driven intervention funds to increase 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 and many others.
Speaking at retreat with theme, “Achieving Economic Diversification for Nigeria via the De-Risking of Lending to the Nigerian Non-oil Sectors, the MD/CEO of NIRSAL, Aliyu Abduhameed, explained that the value chain financing is one of the major problem facing Nigerian agricultural sector.
He pointed out that NIRSAL does this by ‘de-risking’ the agricultural financing value chain, building long-term capabilities and institutionalising agricultural lending through risk sharing with banks, technical capacity building as well as the provision of incentives to encourage bank lending.