The Central Bank of Nigeria, CBN, and commercial banks which have agreed to grant N300 billion loans to the agricultural sector in 2016.
CBN Governor Godwin Emefiele, who is also the Bankers’ Committee chair, made this known at the weekend.
The apex bank boss said the committee’s plan was to get banks to use some of their liquidity to grant new loans to the agricultural sector and its value-chains. It was at the closing of the committee’s seventh retreat in Lagos.
The CBN boss said although there were other intervention funds in the agricultural sectors, which have been substantially disbursed, the N300 billion is a new lending plan. It involves getting the banks to use some of their liquidity to fund agriculture.
“That is why we are talking about removing risk elements along the value-chain, so that banks can lend more to the agric sector. This is a new initiative, and we believe that based on the need to de-risk the value-chain, the loans will be repaid, and jobs will be created for the people,” he said.
Emefiele said the Bankers’ Committee also felt that monetary and fiscal authorities must work together in collaborative manner to achieve the objective of improving local production of specific agricultural products, such as rice, tomatoes, fish and sugar among others.
He said such practice would create reduction in demand for foreign exchange that will help conserve foreign reserves and, by extension, strengthen the local currency.
“We agreed to increase lending to the agricultural sector. Banks know that there is need to improve the level of infrastructure in various sectors, for instance, build more FADAMA roads, provide more power in the various sectors of agriculture, build more silos and warehouses to receive final produce so that products don’t get destroyed right at the farms,” he said.