Deposit Money Banks do not lend to farmers at affordable rates because they are not in tune with agricultural demand across the country, the Nigerian Agribusiness Group has said.
According to the NAGB, commercial banks in Nigeria have a different approach when it comes to lending money for agriculture and should not be forced to lend to farmers at low-interest rates.
The National President of the NABG, Mr. Sani Dangote, said instead of forcing the DMBs to lend to farmers, the Federal Government should strengthen its Bank of Agriculture and recapitalise the institution in order to effectively serve the sector.
Dangote, who spoke at the 2nd Annual General Meeting of the group in Abuja, explained that based on the way the DMBs were structured, it would be difficult for them to lend effectively to farmers.
According to him, the banks should be left to fund the importation of heavy equipment and other similar inputs where they could get back their money within six months to one year.
“That is where their expertise is and I think we should leave them. Trying to bring them into agriculture will be a failure because their mindset is not in tune with farming and processing. So, there is no need forcing a marriage between the two. It won’t work,” Dangote said.
He said the NABG had emphasised the need for the government to recapitalise the BOA and make it a specialised bank for the sector to provide funding for agricultural produce on a long, medium and short-term basis.
He said the Bank of Industry should also be strengthened to work with the BOA in the aspect of processing agricultural produce.
Dangote said the group had also proposed that the government should segment funding of the sector to low, medium and high-risk areas.
He explained that high-risk areas would include the primary production of agricultural produce; medium would include agro processing, while low-risk would deal with the importation of fertiliser or agricultural equipment.
The NABG president also proffered measures through which the government could affectively tackle smuggling.
He said, “Government should look at areas where the country has local capacity and incentivise them. Once this is done, smuggling will become more difficult because there is local capacity. And within few months or a year, the locally produced products will have considerable edge over imported ones and then the issue of smuggling will fizzle out.”
Dangote observed that government did not lack ideas, rather it lacked the will to execute ideas, adding that the private sector was the execution arm.
“So, if the government can come with the right policies that are suitable to stakeholders and the private sector, it will be able to achieve its goals,” he said.