Heritage Bank: Supporting FG’s Diversification Agenda

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After visiting Triton Farms to see aquaculture businesses; nursery/hatchery for the production of fingerlings and brood stock in Ikeja and earthen ponds for catfish and tilapia in Asejire, Iwo and Gambari towns in Oyo State,  Minister of State for Agriculture, Senator Heineken Lokpobiri, marvelled at the financial outlay of the project.

He said such an accomplishment could not have been possible without a strong financial support from a bank. Of course he was told that Triton Farms had accessed a long term loan facility of N2 billion to expand its agricultural businesses. Heritage Bank Plc in collaboration with the Central Bank of Nigeria provided N2billion long term facility under the Commercial Agriculture Credit Scheme to Triton Aqua Africa Ltd (TAAL).

The Company’s strategy is to embrace backward integration through production of fish locally and reduce its importation of frozen fish and as well to assist small scale farms by producing quality breed fingerlings

While taking the minister on a tour of the farms, the Group Head, Agric Finance of Heritage Bank, Olugbenga Awe stated that the partnership between the bank and Triton Farm for local production will conserve scarce foreign exchange and enhance food security.

“Nigeria’s current demand capacity for fish is estimated at 2.7million metric tons and the country currently produces 800,000 metric tons. Triton is now producing 25,000 metric tons and with them on board, about 25,000 metric tons capacity will be added to our current production, the company’s projection is to reach 100,000 metric tons in 5years,” he said.

Awe stressed that Heritage Bank’s support for small scale enterprises is well known and most of the SMEs it has supported play in the agricultural sector.

According to him, the bank sees agriculture as one of its heritage that can empower individuals and communities in terms of creating wealth from the soil and through the entire value –chain using value addition and industrialization.

In view of what he saw during the tour, Lokpobiri stressed that financial support from banks was fundamental to the success of any business, especially agro-related businesses which require long term loans. The minister emphasised that investment in food security as Triton Farms had done with the support of Heritage Bank, was the most profitable venture any investor could think of. With a deficit over two million metric tonnes of poultry produce, and over three million metric tonnes deficit in fish farming products, agro-production in Nigeria has such huge investment potential.

But the minister knows Nigerian banks are not interested in agriculture finance. Their hearts are in the oil and gas, and merchandising, where they are guaranteed quick returns. Even when the Central Bank of Nigeria had earmarked funds for agriculture to be accessed through the banks, some of the banks had connived to channel the funds elsewhere, leaving investors in the sector frustrated.

And that is why he was so impressed by the Heritage Bank initiative that he called on other banks in the country to finance more of agricultural projects as the future of the country is dependent on agriculture.

This is why Heritage Bank rightly deserves acclaim as “Nigeria’s Most Innovative Bank.” The bank has supported large corporates such as Triton to expand their production capacity and boosts import substitution. It has also supported exporters that export commodities or processed goods which ultimately conserve scare foreign exchange and enhance the country’s balance of trade.

It offers a long list of loan varieties, which include loans to small businesses. It offers loan facilities to finance shortfalls in working capital for traders and manufacturers.

Thousands of small holder farms in Kaduna and Zamfara states have benefitted from the bank’s financial support for rice and soya beans production under the Anchor Borrowers Programme. To encourage more youths go into agriculture, the bank is partnering with the CBN on Youth Innovative Entrepreneurship Development Programme.

There is need for the CBN to put measures in place to encourage banks such as Heritage Bank to continue to support agriculture. Unless support for agriculture and manufacturing is made more attractive for banks, only few with commitment to agricultural development such as Heritage will continue to focus on the sector.

The Federal Government, through the CBN, must accord some privileges to financial institutions that are partnering to develop agriculture and the economy, otherwise those supporting the sector now may soon drop out. It is common knowledge that the agricultural sector, with all its potentials, has never been an attractive sector for banks. And the reasons are obvious-it requires long term loan facility, and depends on the vagaries of nature.

Accessing agricultural credit from commercial banks in Nigeria is a difficult enterprise, and is a major reason why the country is yet to realise its full potential as a food basket for Africa and the world. I remember while working as a newspaper correspondent in Kano in 2003, I had travelled with a trade delegation from Israel to all the 44 local governments of the state.

After the tour, leader of the delegation addressed the press after which he took time to respond to questions. On his opinion on the agriculture potential of the state, he had this to say: “From what we have seen in terms of land mass and quality of soil, if Kano were Israel, we will feed the whole of Africa.” He went to express wonder why Nigerians were not interested in agriculture.

Of course, there are so many answers to that, but certainly one of it is that Nigerian banks are not interested in supporting the sector. And no one can blame them. A commercial bank is a business driven by profit. If the sector is not profitable for banks, none of them will touch it.

But perhaps the economic recession may have offered an opportunity for the sector. The President Muhammadu Buhari administration has turned it focus on agriculture and solid minerals as a way out of recession. The CBN is now well positioned to help develop the agriculture sector. It has provided billions of naira on local rice production and milling such that there are suggestions that rice importation may stop in 2017.

As good and commendable as this is, agriculture is ultimately business, and is also profit driven. CBN must put the commercial banks in the drivers’ seat, and only play supportive role. The CBN must deliberately encourage banks to play leading role in agricultural development so as to make the sector more competitive.

Heritage bank’s support for Triton Farm is based on this noble ideal. According to Triton Group Chairman, Ashvin Samtani, the farm, which is fully integrated in aquaculture, poultry and crop production is a platform to create employment for the teeming youth of the country.  “Triton Farm is designed to train youths in agriculture and create employment as well as generate wealth. This is the only farm in the whole region that is fully integrated in aquaculture, poultry and crop production,” he stated.

If the Buhari administration is serious about job creation and pulling the economy out of recession, agricultural ventures such as the Triton Farms and several others of its kind must be encouraged. There must be a deliberate government policy to support such ventures, not just by facilitating access to long term loan, which is of critical importance, but by offering other incentives.

I have no doubt in my mind that this was the motive of Heritage Bank, CBN and the management of Triton Farms when they invited the minister of state for agriculture on the tour. Lockpobiri must now pick the gauntlet and ensure his ministry puts its head and legs into this. This is the fastest way to grow the economy. We have the land, the human resources and the market. What is left is for the government to create the shift towards agriculture by turning it into the new gold mine.

Suleiman wrote from Abuja

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