The Central Bank of Nigeria, CBN, said that Deposit Money Bank’s (DMB’s) credit to the agricultural sector has risen to over 3.7 per cent.

A statement from the CBN reveal that the  figure, which is for 2012, indicates an increase of 85 per cent over the two per cent growth of the agricultural sector share of banks’ credit five years ago. Also, 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 N1.5billion and average duration of loans at 285 days. “It is anticipated that under Nigerian Incentive-Based Risk Sharing System for Agricultural Lending NIRSAL, collaboration between banks and counterparties will push loans under guarantee in excess of N20 billion by end of the first quarter of this year,” the CBN said. The increase has been linked to the N200 billion agriculture credit scheme and N600 billion (NIRSAL).

Some of the banks told reporters that 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 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. The NIRSAL guarantees up to 75 per cent of bank loans to the sector. According to the apex bank, NIRSAL is also expected to be a catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

SOURCE

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