Abuja — Minister of Agriculture and Rural Development, Chief Audu Ogbeh, has lauded the Central Bank of Nigeria, CBN, and Bankers' Committee on the agreement to offer single-digit interest rate loans to operators in the agricultural and manufacturing sectors of the economy.
The facilities would come from Deposit Money Banks' cash reserve held by the apex bank.
Ogbeh's Special Adviser on Media, Dr. Kayode Oyeleye, quoted the minister as describing the development as "a remarkable progress in government's efforts towards boosting the real sector to which agriculture is pivotal."
He noted that the CBN's move was in compliance with the Presidential directive to lower lending rates to the productive sectors of the economy on which the minister had repeatedly assured Nigerians.
He said: "That the Central Bank considered working with the Bankers' Committee to finance agriculture from the commercial banks' huge reserves, running into billions of naira, is a cause for optimism in the agricultural sector.
"This is more so as the single-digit interest rate of nine per cent on long-term credit of a minimum tenor of seven years will support stable agricultural investment and predictable increase in food production.
"The multiplier effect of this initiative at a time of a restructured and recapitalised Bank of Agriculture, BOA, will be a reduction in uncertainties and avoidable risks in agricultural investments where farmers will enjoy wider latitude of access to loans from either commercial banks or BOA with less hassles," he added.
Chief Ogbeh described the cooperation of the banks with the CBN on the use of their CRR to support the agricultural sector through the single-digit lending as commendable.
The Minister regarded this as "very encouraging" even as the economy recovers.
He explained that the single-digit facilities would help revive many ailing and moribund projects and invigorate the weak ones that desperately needed injection of funds to survive.
Chief Ogbeh had said severally that high interest rate was one of the major challenges facing the country's agricultural development and economic growth.
Regretting that the high interest rate charged by commercial banks on loans to farmers was detrimental to the growth and development of agriculture, Chief Ogbeh had even canvassed for as low as five per cent.
He said: "We are still working towards reducing the interest rate on agriculture to five per cent, especially for the small borrowers.
"For us, the major achievement, if we succeed in bringing interest rate down to five per cent is, we believe, in the next two to three years, this country will become a major force in agriculture worldwide.
"This is because no farmer could survive the high interest rates hitherto demanded by Nigerian banks and something needs to be done urgently."
"As a national security issue, food and feeding are very basic and essential. No nation, as a matter of reality, can be great without being able to feed its people.
"Any country with high import taste needs to reverse the trend and support investments that earn foreign exchange in a sustainable way."