The total amount of credit granted by Deposit Money Banks to the agricultural sector declined by N34.45bn from October 2016 and September 2017, an analysis of the banking sector credit report by the National Bureau of Statistics has revealed.
In the report, which was obtained by our correspondent on Thursday, credit from the banks to the agricultural sector declined from N525.9bn to N491.49bn in the period.
Further analysis of the report showed that as of the end of the fourth quarter of 2016, the total credit received by the agriculture sector was 3.26 per cent of the entire banking sector credit to the economy.
The figure, however, declined by 150 basis points to 3.11 per cent as of the end of the third quarter of 2017.
The decline in credit to the agricultural sector may not be in line with the Federal Government’s objective for the sector as contained in its Economic Recovery and Growth Plan.
The plan stipulates that the government will pursue agricultural promotion policies that will enable the sector to record an average annual growth rate of 6.92 per cent between 2017 and 2020.
In order to achieve this, a lot of strategies have been outlined. Some of them are boosting productivity in the crop and other sub sectors, including fisheries, forestry and livestock; integrating the value chain; and improving access to market.
Others are de-risking agricultural lending by expanding the scope of the Nigerian Incentive Based Risk Sharing for Agricultural Lending through sufficient and timely funding and expansion of the use of dams for commercial farming and aqua culture.
Speaking on agriculture funding, the Group Head, Agric Desk, Access Bank Plc, Mr. David Ajayi, said the bank would continue to adopt the value chain approach to agricultural lending.
He stated that while the outlook for the agricultural sector was encouraging, there was a need to address the challenges that had militated against the achievement of sustained growth in the sector.
Ajayi said at a customer forum in Abuja, “Agriculture had, in this out-going year (2017), attracted favourable government policies and this is expected to continue in the new year. There are also many intervention schemes to improve access to finance.
“As a strong player in the agricultural sector, Access Bank will continue to support all her agribusiness customers to enhance the success of their businesses.”
A former Managing Director, Unity Bank Plc, Mr. Rislanudeen Mohammed, said there was a need for deliberate policies to encourage lending to agriculture.
He also called for policy articulation to support public-private partnership as well as direct private investment in agriculture and agro allied industries.
Mohammed stated, “We need to focus on policies that support backward and forward integration and seek to make agriculture as a business rather than just for self-sufficiency.
“Recapitalising the Bank of Agriculture as well as the $1.3bn anticipated offshore investment to support the Development Bank of Nigeria are areas that will ensure single digit interest rate funding for agriculture and agro allied businesses.
“This will help support the Gross Domestic Product growth rate, reduce foreign exchange pressure for imports as well as minimise the impact of imported food inflation on our economy.