CBN wants banks to increase loans to agricultural sector to 10% in 4-yr
The Central Bank of Nigeria (CBN) on Tuesday said the best way to boost food production in the country is for banks to increase lending to the agricultural sector to 10 percent within the next four years.
According to the governor of the bank, Godwin Emefiele, who spoke at the 13 banking conference in Abuja organized by the Chartered Institute of Bankers of Nigeria (CIBN) noted that loans to the agricultural sector account for around 4 percent of total credit disbursed by banks.
“Over the next 4 years, the banking sector should consider ways under which it could increase its loans to the agriculture sector from 4 percent to 10 percent by 2024.
“These measures would help to improve productivity of farmers, increase our foreign exchange earnings, reduce post-harvest losses, while supporting the growth of other sectors of our economy such as manufacturing, and transportation,” Emefiele said.
He said banks should tap the opportunities banks in the agricultural sector which include addressing some of the existing gaps in the agriculture value chains, such as storage centers, transport logistics, and technology platforms, that can enable rural farmers to sell their produce directly to the markets.
Emefiele said the coronavirus pandemic had exposed the risk of relying on food and drug imports, as most countries are reluctant to export goods.
“It is therefore imperative from an economic as well as a security perspective, that our banking and financial system works to support growth in sectors that have significant growth potential, and can enhance the resilience of the Nigerian economy, in the face of external shocks,” the CBN Governor told bank chiefs at the conference.
Nigeria is reliant on imports, including of foods, to meet its needs due to limited manufacturing capacity. It has been trying to cut its $20 billion annual food import bill, but has struggled to build up an economy outside its dominant oil sector.
Last week, President Muhammadu Buhari instructed the CBN to stop providing foreign exchange to importers of food and fertilizer.
Despite rice growing being a government priority, many farmers still work with their bare hands in fields lacking irrigation channels.
Mills are often ramshackle, while poor roads make getting the crop from the main growing areas in northern Nigeria to consumers in the south difficult and costly.
The country is facing its worst economic crisis in four decades, triggered by an oil price crash induced by the pandemic with the GDP declined 6.1 percent in the second quarter of the year.
The federal government said it has lost 65 percent of revenue both from crude oil exports and non-oil export due to the effect of the pandemic on global trade.
Bayo Olugbemi, president of the CIBN said the 13th edition of the Conference is a unique one in the annals of the Institute to be deployed as a hybrid of both physical and virtual attendance of over 2,500 participants from various locations across the globe.
“Despite the challenges of the pandemic, the Institute has been innovative in executing all its activities including my investiture as the 21st President/Chairman of Council of the Institute using Digital Platforms,” Olugbemi told bankers at the conference.