Bankers have decided to increase its credit to the agric sector from 0.8% to 2% by the end of this year in order to boost agriculture.
Chief Executive Officer of United Bank for Africa, Philips Oduoza, who made this known at the signing of Memorandum of Understanding between the Federal Ministry of Agriculture and Rural Development and the Tony Elumelu Foundation at Transcorp Hilton Abuja on Tuesday, said the banking industry has disbursed "as much as about N200 billion" in commercial agric credit scheme.
He said: "The whole essence of the Agric Credit Scheme is to lend to farmers at subsidised rate. And the maximum the banking industry is lending under this particular scheme is 9%. So, whereas the other sectors of the economy are borrowing at double digit, at 20%, at 18%, the farmers, the producers, the processors in this particular segment that are utilising the Commercial Agric Credit Scheme are borrowing at maximum of 9%. Some are even enjoying the credit at about 7%, some at 5% and so on.
"In the Bankers' Committee we have decided that we want to move up our disbursement to the agric sector. Today, the total portfolio is under 1%; it is having about 0.8% of our total portfolio in the industry. So, the lending to the agric segment in the industry is under 1%. We took a conscious decision that we want to move it up by the end of this year to a minimum of 2%. And we are moving in that particular direction."
The founder of Tony Elumelu Foundation, Tony Elumelu said the MOU is meant "to have an investment advisor in the agric ministry; somebody who is experienced, exposed, very knowledgeable, who can help ensure that the policies put in place by the agric ministry aligns to what they want to achieve, which is to have a private sector-led agric transformation supported by the public sector. So, somebody will help see that the right policies are put in place to create a competitive and enabling environment that will help the ministry achieve the purpose of attracting the private sector into the agric space."
Elumelu said his foundation has signed an MOU with a Pakistani group to set up a fertilizer plant in the country, adding that the result of study of failed agric projects across the country would soon be available to the would-be investors so that they can have a better understanding of the industry.
Minister of Agriculture, Akinwumi Adesina, said his reform in the agric ministry is already yielding results as both local and foreign investors have started investing in the industry.