The federal government has said it will finalise the recapitalisation of the Bank of Agriculture (BoA) in 90 days, in collaboration with the Bureau of Public Enterprises (BPE).
The minister of agriculture and rural development, Chief Audu Ogbeh, who disclosed this at the kick-off meeting for the recapitalisation of the bank yesterday in Abuja, noted that the recapitalisation would be done with an estimated N250 billion.
The move, he said, is to reposition the bank as almost a private sector- driven financial institution that will be able to give out loans to farmers at a very low interest rate.
LEADERSHIP recalls that during the inception of this present administration, efforts were made by the Federal Ministry of Agriculture and Rural Development and the BPE to recapitalise the bank, and its headquarters was also relocated to Abuja.
Speaking during a press briefing in Abuja yesterday, Chief Ogbeh expressed optimism that after its recapitalisation, the bank would be a large bank that will ensure that farmers access loans easily.
“We have a new vision for agriculture here. We want to create the farmers’ bank and we want all of you to pass the good news to farmers, that this is their chance to become co-members and owners of the bank. It has a chance of becoming a very large bank in the future, just like the one in China.
“If this structure we want to put in place now starts working successfully, and we raise a capital base of anything between N200 billion and N250 billion and farmers can access credit at the lower end of the single digit (lower than 6 per cent and 5 per cent), we hope to achieve a whole lot of things,” he said.
The minister attributed the failures in agriculture to number of factors, including poor management and “excessive interest rate and sometimes agronomic practices which are not in place or properly aligned.”
Ogbeh further asserted that the agric ministry was going to support the bank so the possibilities of failure are minimised.
“We begin with the seed, by increasing our seed supply to farmers and make sure they don’t fail. We then go on to soil testing, to make sure that the right kind of soil and right kind of fertiliser is applied,” he said.
While stressing the need to make agriculture the mainstay of the economy, the minister said that currently Nigeria has saved about $21 billion from food import in the last three and half years, even as exportation has also gone up to 500 per cent.
“Two banks in Nigeria announced that we have actually saved $21 billion on food import in three and half years, and the Bureau of Statistics has affirmed that agriculture exportation has gone up to 500 per cent since we came in, and we are just beginning.
“We need value addition, we need cottage industries, we need to decongest the cities so that young people can be comfortable in their rural environments, making money and living a good life. We want to minimise the tendency of our young people crossing the desert to Europe in search of happiness which doesn’t exist anywhere”, Ogbeh said.
Also speaking, the director-general, Bureau of Public Enterprises, Mr Alex Okoh explained that the new bank will have private sector component with farmers acquiring about 60 per cent of the shares, while government maintains 40 per cent shares.
Okoh explained that BOA had the potential to make positive impact in a nation with national endowment from arable farming, vast irrigation and good weather, with over 30 per cent of the populace engaged in farming.
The BPE boss stated that the new strategy would see BOA transformed into a truly agriculture and finance bank modelled along the lines of Agriculture Bank of China with functional branches in all the local government areas and major towns in Nigeria.
He said, “In terms of shareholding, the federal government will retain only a minority equity stake of 40 percent while farmers’ cooperatives and the private sector will acquire a substantial and controlling stake .
“In order to facilitate guaranteed repayment and achieve noticeable impact on farming and agriculture, farmers will be encouraged to form cluster of cooperatives and societies for the purpose of participating in the ownership of the banks. Essentially, this will be a farmers’ bank.
“This, we believe, will inculcate a more disciplined culture in loan repayment and credit performance and also instil responsible behaviour in honouring credit commitment
“We notice that farmers borrow from BOA with some form of entitlement mentality and believing this is just part of the national cake and not due for repayment. We believe that a structured BOA will prevent this kind of attitude from running down the bank. We also expect that the non- performing credit facilities will be taken off the balance sheet and could be sold off to a factor agent .
“We need to recapitalise the bank to ensure that there are no existing liabilities on the balance sheet of the bank. This we believe will make it attractive to the private sector investors and also give the bank a clean slate from which it can grow its operations.”