The Federal Government in its determination to restore agricultural sector as the mainstay of the economy is planning an agricultural transformation credit system where it would raise debt from the capital market to enable farmers have access to finance at a low interest rate.
The Minister of Agriculture, Dr. Akinwumi Adesina speaking at the CEO Quarterly Dinner for Agriculture Sector organised by the Nigerian Stock Exchange (NSE) said no farmer could operate well under the current lending rate in the country.
“When it comes to agriculture it needs a lot of money, and the traditional way of funding agriculture is through commercial bank and I must say that the CBN and my ministry are working very closely together with all the banks in terms of increasing lending from the banks to agric sector. So far right now only one per cent of total lending by banks goes into the agric sector, the issue is the rate at which the money is being lent to farmers is at 24 per cent.
The Minister noted that no farmer would do agriculture and succeed if banks at the current lending rate, which he said the government needed a new system that would finance agriculture in the country.
He maintained that debt raised from the capital market could be used to augment agricultural financial institution’s lending to farmers in this country.
“The US Farm Credit System operates that way, today it lends $175 billion every year to farmers and so I discussed with the Stock Exchange about a similar system, that would bring agricultural transformation credit system where people raise debt from the capital market and finance the entire farmers of this country to have access to low interest rate,” Adesina said.
He listed the advantage of sourcing funds from the capital market to include expanding the volume of money, reducing the rate of interests that the famers are actually getting, and getting long term money which is good for the nature of the business.
The chief Executive Officer of the Exchange, Mr. Oscar Onyema speaking at a Sectorial Dinner said that the stock market provides various benefits to corporate entities, such as Agric sector, in the provision of long-term capital.
Onyema encouraged the companies to utilize the opportunities available at the capital market as part of the financing mix for their various businesses.
Onyema noted that as Nigeria’s Agricultural sector grows, he firmly believes that The Nigerian Stock Exchange is the right platform to raise capital towards this growth and expansion.
He noted that the Exchange is emerging stronger and more focused and that despite recent setbacks, “we look forward to sustained recovery in the capital market as it continues to be reformed and strengthened. We want to ensure that all of your companies, listed or prospective realize the value of listing on The Exchange, and indeed forums such as this are vital in that effort.”