Nigeria: Banks' loans to agricultural sector on the rise
The Central Bank of Nigeria (CBN) has announced that Deposit Money Bank's (DMB's) credit to the agricultural sector has risen to over 3.7 per cent in 2012.The Central Bank of Nigeria (CBN) has announced that Deposit Money Bank's (DMB's) credit to the agricultural sector has risen to over 3.7 per cent in 2012.
Data obtained recently from the Bankers Committee also
that between July and November last year, the country's lenders issued over N6 billion (€28.1 million) in credit guarantees to farmers, Vanguard reports.
According to the CBN, this loan increase is due to the launch of the NIRSAL initiative, which seeks to create incentives and catalyse processes to encourage the growth of formal credit for the agriculture value chain by guaranteeing up to 75 per cent of bank loans to the sector.
"It is anticipated that under Nigerian Incentive-Based Risk Sharing System for Agricultural Lending NIRSAL, collaboration between banks and counterparties will push loans under guarantee in excess of N20 billion by end of the first quarter of this year," the CBN said in a statement.
Several bank officials told Vanguard that the regulator plans to spend an estimated $500 million (€377 million) to create further incentives for the banks to sustain the flow of agricultural credit.
The sector employs 70 per cent of Nigeria’s population, according to figures from the World Bank.