The Central Bank of Nigeria (CBN) has revealed that the country needs to increase its level of bank credit to the agricultural sector by over 50% within the next 4 years to boost food production.
The implementation of this is expected to drive the allocation to the sector to 10% of the entire credit in the banking sector from the current 4%.
This disclosure was made by the CBN Governor, Godwin Emefiele, on Tuesday, September 15, 2020, at the 13th Annual Banking and Finance Conference, organized by the Chartered Institute of Bankers (CIBN) in Abuja.
Emefiele said that the banking sector should focus on increasing its support for the agricultural sector, as the coronavirus pandemic has caused disruptions on global supply chains and food supply from other countries.
The CBN boss stated that some of the opportunities in the agricultural sector that banks should explore include addressing some of the existing gaps in the agriculture value chain like storage centres, transport logistics and technology platforms, that can enable rural farmers to sell their produce directly to the markets.
Emefiele also disclosed to bankers that currently, loans to the food sector accounts for around 4% of the total credit in the banking sector. He said the pandemic had exposed the risk of relying on food and drug imports, as most countries are reluctant to export goods to other countries.
Nairametrics had reported on President Muhammadu Buhari’s directive to CBN not to allocate foreign exchange for food and fertilizer imports. He said the Federal Government would rather empower more local farmers and use agriculture as a means to create more employment among Nigerians.
Nigeria is reliant on imports, including food items, to meet its needs due to limited manufacturing capacity. It has been struggling to reduce its $20 billion annual food import bill as it finds it difficult to diversify the economy away from oil.
Emefiele told bankers that currently, loans to the food sector accounts for around 4% of the total credit in the banking sector.