The
United States Agency for International Development (USAID) is supporting the
Federal Government’s agriculture programme with $3billion, about N480bn agric
funding, reports NaijaAgroNet.
Governor,
Central Bank of Nigeria (CBN), Mr. Lamido Sanusi, made this known in the
company of Federal Minister of
Agriculture and Rural Development (FMARD), Dr. Akinwumi Adesina, who signed on
behalf of the Federal Government, whereas the USAID Administrator, Dr. Rajiv
Shah, endorsed the dotted lines for the agency.
NaijaAgroNet reports that the agreement, which was signed at the CBN headquarters in Abuja,
showed that it will enable the parties to use co-guaranties, joint technical
assistance, combined training and workshops for local banks and
agriculturally-linked enterprises to encourage the growth of the agriculture
sector in Nigeria.
Also
speaking, Shah said under the agreement, the US would immediately provide
guarantee of up to $100m in commercial lending to Nigerian banks. Stressing
that the move will help increase private financing to the sector as well as
reduce banks’ apathy to agricultural lending.
“We
are very proud of this partnership agreement because we know that in all of the
promise and success that the future holds for Nigeria; agriculture nearly 70
per cent of small scale farmers lack access to financing. Because of this
partnership, hundreds of millions of dollars will be made available so that
farmers can access and improve their production system and their processing
operations,” he said.
Equally
commenting, Adesina said the grant would help to address some of the issues
affecting lending to the sector by banks, noting that the high interest rates,
persistently decline in the quantum of lending to the sector and risk of
default.
“What this facility is going to do, and I
really commend the Central Bank governor, is to reduce the risk of lending by
banks,” he said.
Pointing
out that they were thrilled at the $8bn
investment commitment into this sector in one year and were also excited by the fact that of the N3bn
that was lent last year to seeds and fertilizer companies, the default rate was
zero per cent.
“So,
on this facility, the central bank will put out risk sharing instruments, which
will leverage the excess liquidity from the commercial banks. The total amount
that we are looking at is $3bn overtime,” he said.
Adesina
said, the amount that would be facilitated under the Nigerian Incentive-based
Risk Sharing for Agriculture Lending had about four components.
The
components are to reduce the risk faced by banks, provide technical assistance
to banks, improve the agriculture value chain and provide insurance cover.
As
said, Adesina noted that the grant is an endorsement of the fact that the Central
Bank and the banking community recognise there is a revolution on the way in
Nigeria in agriculture.
“They are ready to put
significant financing behind it,” he said.
Isaac Oyimah/GEE
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