The Central Bank of Nigeria, CBN, has advised banks to grow the share of their credit to the agricultural sector by more than twice its current size.
By this they would make it up to one tenth of their total loan portfolio in the next four years in order to stimulate food production in Nigeria.
Governor of the Bank, Godwin Emefiele, made the call on Tuesday.
The country depends substantially on imports like foods to compliment local production because of its manufacturing inadequacy.
In recent years, it has taken actions to trim its $20 billion yearly spending on food importation, with government banning forex sales for food imports last week in its latest protectionist effort.
Currently, credit to the food sector is in the region of 4% of total exposure; Emefiele told bankers, going further to say the COVID-19 crisis had bared the vulnerabilities; inherent reliance on food importation as most nations are unwilling to import goods.
A lot of farmers still work with their hands in rice plantations without irrigation facilities; even though government prioritised the cultivation of the crop on a large scale.
Mills are largely run with dilapidated machinery while Nigeria’s network of decrepit roads has made conveyance of the produce from the north where it is mostly grown, to consumers in southern Nigeria to consumers hard and expensive.
Nigeria is confronting its worst slowdown in forty years; set in motion by an oil crash caused by the pandemic outbreak.
The problem has eroded government revenues; weakened the naira; and widened the financing gap.