Bankers’ committee targets 7% growth in agric loan

The Bankers’ Committee is targeting a loan growth of 7 percent to the agricultural sector of the Nigerian economy by 2015, governor of the Central Bank of Nigeria (CBN), Sanusi Sanusi Lamido, has said.

The Bankers’ Committee is an association of managing directors of deposit money banks (DMBs), top officials of the CBN, the Nigerian Deposit Insurance Corporation (NDIC) which meet once bi-monthly to discuss the state of affairs of the industry and the economy.

Credit to the agricultural sector had risen from 1.6 percent in 2009 to 3.7 percent this year.

The current figure indicates an increase of 85 percent over the 1.6 percent growth of the agricultural sector share of banks’ credit four years ago. Sanusi, the chairman of the Bankers’ Committee, disclosed the projected growth in the agric sector at the end of the committee’s 5th annual retreat held in Calabar weekend.

He said the committee also expects credits to the sector to rise to 5 percent next year.

The CBN governor assured Nigerians and other stakeholders in the banking sector that the Bankers’ Committee would continuously collaborate to promote an efficient and stable economy for the country.

He also disclosed that part of the 2014 action plan of the committee would be to deliver price stability, financial stability, financial inclusion and economic growth.

He also explained that the committee has revalidated its goals to include the modernisation of the payment system; shared services and infrastructure for the financial industry to reduce cost; increased funding of small and medium enterprises; agriculture; power and telecommunication sectors.

Meanwhile, data obtained recently from the Bankers’ Committee show that between July and November last year, the country’s lenders issued over N6 billion in credit guarantees to farmers. The loans came with the following broad parameters: average loan guaranteed amounting to N397 million, with a range of N4 million to N1.5 billion and average duration of loans at 285 days.

“It is anticipated that the NIRSAL collaboration between banks and counter-parties will push loans under guarantee in excess of N25 billion before the end of this year,” the CBN said.

The increase has been linked to the N200 billion agriculture credit scheme and N600 billion Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).

The NIRSAL guarantees up to 75 percent of bank loans to the sector.

Sources within the banks said the regulator plans to spend an estimated $500 million to create further incentives for the banks to sustain the flow of agric credit. The NIRSAL initiative, which is the brainchild of the CBN, the Bankers’ Committee and the Federal Ministry of Agriculture & Rural Development (FMARD), seeks to create incentives and catalyse processes to encourage the growth of formal credit, direct and indirect, for the agriculture value chain, as a mechanism for driving wealth creation among value chain participants.