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“Agricultural Sector has Attracted $8 Billion Foreign Direct Investment (FDI) In the Last One Year” – Akinwunmi

By on December 17, 2012

Agric Minister, Akinwunmi Adesina

During a workshop on Financing Nigeria’s Agricultural Revolution organised by the Securities and Exchange Commission (SEC), the Minister of Agriculture, and Rural Development, Adesina Akinwunmi said The Nigerian agricultural sector has attracted $8 billion foreign direct investment (FDI) in the last one year.

Adding, the minister said that agricultural lending has great potential and has grown from one per cent to over three per cent in the last one year.

He called on banks to consider agricultural financing as serious business, which he believes banks can gain from therefore all stakeholders should come together to unlock the potentials in the sector.

He said that public equity funds also need to increase their stake in agricultural financing.

He disclosed that the Incentive Based Risk Sharing for Agricultural Lending (NIRSAL), which allows bank to share the risk, is linked with lending business in the sector as sanctioned by the Central Bank of Nigeria (CBN).

Apart from risk management, CBN is also looking into an intensive performance rating for all commercial banks to determine their effectiveness of lending to agriculture. In making the NIRSAL project a reality CBN has set aside N75 billion for its full implementation.

News rules have been recently set by the apex bank for lending in the agric sector of the economy. This decision came following reports from banks and discount houses indicated that lending to the subsector remains a high-risk.

A statement released by CBN said “agricultural lending accounts for approximately 1.4 per cent of formal lending, and has been on the decline since 2006 because of the perceived risk of the sector because banks have limited understanding of and lack of confidence in the sector.”

In a bid to reduce the risk involved in lending the apex bank said that lenders should conduct environment and social risk analysis and assessment of agricultural clients and activities before extending loans to them.

In the said rule, it said lenders are also expected to make sure that known risks are passably scrutinized and managed while sticking on to local environmental and social laws.