The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, has commended the Central Bank of Nigeria (CBN) and the Bankers’ Committee on the latest directive to banks to provide loans at single digit interest rate to the agricultural and manufacturing sectors of the economy.
The Special Adviser on Media to the Minister, Dr. Kayode Oyeleye, was reported to have quoted the minister as describing the new monetary policy measure as representing a major milestone in government’s efforts towards improving the performances of the agricultural and real sectors.
Oyeleye linked the monetary policy measure which will enable Deposit Money Banks (DMBs) to use their cash reserves held by the apex bank for the credit to farmers and others as aligning with the Presidential directive to lower lending rates to the productive sectors of the economy.
According to him, the apex bank’s desire to work with the DMBs to provide loans at single digit to finance agriculture and real sector remains is a desirable development that is bound to impact positively on the nation’s economy in multi-dimensional ways.
He explained: “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”, the minister added.
Ogbeh explained further that the single-digit facilities would help revive many moribund agro-oriented businesses and revitalise the weak ones that needed injection of funds to survive with the attendant results in improved jobs and income for all stakeholders, including the government.
Noting that the high interest rate charged by DMBs on loans to farmers and manufacturers had in the past contributed to the low contributions of agricultural and manufacturing sectors to the nation’s GDP, the minister had earlier recommended a maximum of five percent interest on loans to operators in the sectors.
He clarified further: “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”, Ogbeh added.
