Nigeria plans to capitalize its
state-owned Bank of Agriculture with N1 trillion ($3.2 billion) and will
allow the lender to take deposits as Africa’s most-populous nation
seeks to boost farming output and reduce food imports.
“We are looking at 25 million farmers” as
stakeholders or depositors,
Agriculture and Rural Development Minister
Audu Ogbeh said in an interview with Bloomberg in Abuja. “We are
probably going to take a major step by the end of this year, and by
February, March, have a structure in place for the changes we want to
carry out.”
Nigeria’s economy contracted in the first
nine months of the year as output of oil, the government’s main source
of revenue, dropped due to attacks by militant groups on pipelines in
the Niger River delta and prices remained low. Farming, which mostly
consists of crops including cocoa, accounts for more than 25 percent of
gross domestic product, and has expanded every quarter of 2016, while
factory output and mining, which includes the oil industry, shrank,
according to the National Bureau of Statistics.
The Bank of Agriculture will start
lending for farming projects at an interest rate of less than 10
percent, or less than half of commercial market rates, Ogbeh said.
The bank, created in 1972 to provide
credit and technical support to farming projects, lent at least 41
billion naira to 600 businesses across Nigeria over 10 years, according
to information on its website.
“It’s good to invest in the bank, but they should ensure they have proper management to improve its performance and efficiency,” the division head for agriculture at Fidelity Bank Plc, Musa Tarimbuka said.
“They have disbursed a lot of money over the past 40 years, and the non-performing loans are very high.”
The government plans to distribute 110 rice mills across the country over the next two months at a subsidy of 40 percent, Ogbeh said. These measures will help boost production and reduce food imports, which were worth about 1.2 trillion naira last year, according to statistics bureau data, he said.
The government plans to distribute 110 rice mills across the country over the next two months at a subsidy of 40 percent, Ogbeh said. These measures will help boost production and reduce food imports, which were worth about 1.2 trillion naira last year, according to statistics bureau data, he said.
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