BY VICTORIA ONU, ABUJA
The Central Bank of Nigeria is planning to increase the level of banking sector credit to the agricultural sector from its current six per cent to ten per cent by 2024.
The move is part of measures aimed at reducing the level of food inflation in the country by boosting productivity in the sector particularly as it relates to the agricultural value chain.
Nigeria’s inflation rate currently stands at 15.63 per cent according to the National Bureau of Statistics.
The country is faced with rising inflationary pressures, particularly, as it relates to food prices.
Banks’ gross credit to the Nigerian economy as of November last year was at N23.5tn, according to figures obtained from the CBN.
With the plan to raise the portion of banking sector credit to the agricultural sector to 10 per cent, it means that the sector could be allocated as high as N2.35trn of bank loans.
This measure would ultimately increase the flow of funds to support expansion of agriculture and agro processing activities in the country, which will create jobs and wealth for the people.
The CBN Governor, Godwin Emefiele, said that food security and job creation are fundamental building blocks in ensuring macro-economic stability, which is a cardinal mandate for central banks
According to him, central banks and the financial system have critical roles to play in powering the solutions to the issues of food security and job creation on the African continent
With an annual population growth rate of close to 2.8 percent, Emefiele said it was important that all efforts are concentrated at ensuring that employment opportunities were available for Nigerians particularly in sectors that have the ability to absorb key segments of the growing population.
Some of these sectors, according to him are agriculture and manufacturing, which represented 10 and 27 per cent of Gross Domestic Product respectively.
Notwithstanding the relevance of these sectors, the apex bank boss said that sectoral credit allocation to them remained low relative to credit to the oil and gas sector, which stood at close to 29 per cent in 2014.
In contrast, he said that credit to the manufacturing and agricultural sectors stood at 10 per cent and three percent respectively.
He said, “Given our population size of over 200 million people along with favourable youth demographics, we were aware that if the necessary support was provided to households and business such as improved access to finance, and better infrastructure these measures would boost productivity, and help in enabling greater direct investment flows into our economy.
“As a result, there was a growing recognition of the need to refine our monetary policy tools and regulatory framework in order to ensure that it was more responsive to the needs of the Nigerian populace.
“It was important that this new framework enabled the flow of credit by financial institutions to critical sectors in order to aid our efforts at driving productive activities and creating job opportunities for our growing population.
“More importantly, the design to curb a framework was excessive penchant for imports particularly in areas where we possessed the manpower and resources to produce such goods in Nigeria.”
In the last few months, over N1trn ($2.5bn) had been earmarked to target key initiatives in the manufacturing, mining and agriculture, services sectors.
Over 80 per cent of this fund was targeted at the agric sector.
The bank had also disbursed about $2bn of this fund to over three million farmers cultivating over 4.7 million hectares of arable land in the 36 states and the Federal Capital Territory under the Nigerian Anchors Borrowers Programme.
In addition, credit to the manufacturing sector has risen from 10 per cent in 2014 to 16 percent in 2021 and in the agriculture sector, credit has grown from 3 per cent in 2013 to 6 per cent in 2022.
