Despite efforts by the Nigerian government to focus on agriculture and make it a mainstay of the Nigerian economy, Nigerian banks gave only 4.20 per cent of their total loans to the sector in the second quarter (Q2) of this year.
A total of N15.1 trillion was given as loans in the second quarter of 2019, out of which only N636 billion was given to agriculture. The figures were disclosed by the National Bureau of Statistics (NBS) in a report on its website titled ‘selected banking sector’ data for Q2 2019.
The bureau said the data was supplied administratively by the Central Bank of Nigeria (CBN) and was verified and validated by the NBS. There was also no significant difference in loans to the agriculture sector between Q1 and Q2 2019. In each, only 4.20 per cent of the total loans were given to the agriculture sector.
In the first quarter, a total of N15.2 trillion was given as loans with agriculture getting only N638 billion. The Industry and Service sectors got the highest loans from Nigerian banks in the two quarters. In the first quarter of 2019, Industry and Service sectors got 40.27 and 55.53 per cent of loans respectively, while in the second quarter, they were allocated 39.60 and 56. 20 per cent respectively.
Efforts to Improve Agriculture
To ensure Nigerian farmers are able to access loans, despite the lack of support from private banks, the central bank introduced the Anchor Borrowers Programme (ABP) in 2015. The ABP also aims to achieve financial inclusion by helping farmers have easy access to credit. The loans are targeted at smallholder farmers engaged in the production of identified commodities across the country. The farmers are expected to cluster in groups/cooperative(s) of between five and 20 for ease of administration.
The ABP programme, despite challenges, has contributed to a huge increase in the volume of local rice produced. However, despite the efforts of the government, rural farmers still lament about poor access to credits.
An agricultural entrepreneur, Sola Fagorusi, said the allocation to the agriculture sector is not commensurate with the efforts to improve the sector. He accused the federal government of not doing enough, making reference to the 1.6 per cent 2019 budgetary allocation to the sector. “If the government is not matching the actions, so how do they make banks allocate better amount,” he said. “Unfortunately, agriculture is a long term business and requires commitment. Four per cent will not take us anywhere,” he said of the bank’s loans to agriculture.
For an economist, Paul Alaje, the loan to the sector shows that agriculture is not a priority to both the government and the banking sector. He said this is especially worrisome for a country like Nigeria that plans to diversify its revenue source from oil and gas to agriculture. “We must find other alternatives to support agriculture. The facility will not support agriculture as we want it,” he said.