With the down turn in oil prices in the international market, the Central Bank of Nigeria (CBN) is set to spearhead a major policy shift that will entail Deposit Money Banks (DMB) rethinking their lending preferences. This will also, according to the CBN, bring in insurance companies which will be expected to design innovative agricultural insurance products that will enhance lending to the sector.
It is no longer news that in the wake of the oil boom in Nigeria, agriculture that used to be the country’s mainstay suffered what experts describe as criminal neglect. In the circumstance, Nigeria that was a net exporter of agricultural produce became an importer of those commodities to the tune of about N630billion with telling effects on the nation as it transited from a multicultural to a mono-cultural economy.
The CBN Governor, Mr Godwin Emefiele, at a recent workshop on the issue, observed in a matter-of-fact manner, that the agricultural sector provides up to 70 per cent of employment in the country and accounts for about 42 per cent of her Gross Domestic Product (GDP) mainly by rural farmers. He lamented that these rural farmers are producing sub-optimally due to lack of adequate inputs, insufficient exposure to good agronomic practices and limited access to finance and credit.
The apex bank chief also said that currently, the banks lend as low as four per cent of their formal credit to the sector, even as it is an improvement on what obtained three years ago when it was as shamefully low as one per cent. The excuse has always being that the sector is risk-prone as if business is not all about risk taking.
Curiously, all these banks have agriculture desks. There are even whole banks dedicated to financing small and medium scale businesses, majority of which are agriculture-based. These banks would rather lend to traders and importers of farm produce such as rice, poultry, flour, fish tomato paste, textile and sugar than support local producers of the same commodities. These category of businesses guarantee them quick return on ‘investment’. With the introduction of Treasury Single Account (TSA), those investments are turning out to be public money fixed by corrupt government officials which they turn around and make huge profits at the expense of the economy.
It is on record that the CBN, from time to time, does make efforts to encourage these banks by extending to them facilities that are geared towards cushioning any losses they may incur in the process of lending to farmers. At least we know of the one on textile. In spite of this, the banks have continued to turn their backs on farmers. No country survives without a solid agricultural base. Food security is the best form of security. It has been proved that most of the street boys who join criminal gangs do so out of want, especially hunger.
In the implementation of this policy, we urge the CBN to deploy its carrot and stick measures. It’s time banks started playing their real roles in the economy.