The Director General of the Bureau of Public Enterprises (BPE), Mr. Alex A. Okoh, has described the planned restructuring of the Bank of Agriculture (BOA) as imperative in order to improve its operating framework and governance structure with a view to enhancing its efficiency.
Okoh, who made this remark at the maiden meeting for the recapitalisation of the bank in Abuja, said that the Bank had performed sub-optimally due to the myriad of challenges it faced since inception in 1972.
He explained that the planned restructuring and recapitalisation would lead to the privatisation of equity of the bank that will reduce the Central Bank of Nigeria’s (CBN’s) equity to about 20 per cent while Federal Ministry of Finance’s (incorporated) equity also be reduced to 20 percent, thereby reducing public sector equity in the new bank to 40 percent.
Okoh hinted that the conclusion of the restructuring process would lead to the invitation of private sector investors who would own 20 percent of the new bank’s equity while the remaining 40 percent will be owned by farmers and farmers’ cooperatives”.
He stated that the new strategy envisages that BoA would be transformed into a truly agriculture finance bank modeled along the lines of Agriculture Bank of China and Rabobank of the Netherlands, adding that upon its establishment in 1972 to serve as an agricultural and cooperative bank to provide services of a development finance institution, it was vested with the responsibility of providing low cost credit to small holder and commercial farmers.
The BPE boss, however, lamented that the bank had been unable to fulfil its mandate over the years due to its current structure.
He maintained that the proposed restructuring and recapitalisation of the Bank would transform it strictly into an agricultural finance bank with functional branches in all the local government areas and major towns in the country.
According to him, the model is sure to encourage farmers to form clusters of cooperatives and thrift societies throughout the six geo-political zones for the purposes of participating in the ownership of the bank.
On the sustainability of the strategy and attracting investment, the privatization expert explained that measures would be put in place to take non-performing credit facilities off the balance sheet and books of the bank and possibly sold off to a factor agent.
He said further that the measure was designed to make the bank attractive to investors and also attract cheap funding from multilateral development institutions and other institutional investors with a focus on agricultural financing.
