Chief Audu Ogbeh, the Minister of Agriculture and Rural Development, has commended the Central Bank of Nigeria (CBN) new nine per cent lending policy to farmers.
Ogbeh, who gave the commendation in Abuja on Wednesday while briefing newsmen assured of plans to further reduce the rates to between six and seven per cent.
The CBN, on Aug. 23, announced its nine per cent new credit policy, called Guidelines for Accessing Real Sector Support Facility (RSSF).
RSSF is being achieved through Cash Reserve Ratio (CRR) and Corporate Bonds.
The minister said that the ministry was speaking with the Nigeria Incentive Based Risks Sharing System for Agricultural Lending (NIRSAL) to fashion out ways to further reduce the rates.
He, however, called on borrowers of the loans, especially farmers and industrialists to ensure prompt repayment.
The minister promised that the ministry would collaborate with CBN and banks to ensure that farmers who borrowed repaid the loans.
Ogbeh said the initial high interest rates had been responsible for the slow growth and high incapacity of Nigerians to create jobs for young people.
He described the new policy as first and major step toward toward reversing the damages done to Africa by the Structural Adjustment Programme (SAP) of the mid 80’s.
“We have been advocating this for many years. I have always had this strong feeling that the lending rates in Nigeria could not sustain growth in the economy.
“We want to thank CBN and the Committee of Bankers for listening to our appeals and I wish to assure them that this bold and revolutionary policy is deeply appreciated by farmers and manufacturers.
“We were pushing for five per cent interest rate but they gave us nine per cent, we thank them for that.
“We are talking to Nigeria Incentive Based Risks Sharing System for Agricultural Lending (NIRSAL). By the time they come in fully and we discuss the details, we may get much lesser figure.
“I don’t know if we will get five per cent yet but we will definitely get something less than nine. May be six or seven per cent, he said.
He said the ministry would join hands with banks and CBN to make sure that farmers, who borrowed, repay loan.
“We intend to use the cooperatives to impact the people, especially women and youths.’’
The minister quoted the CBN as saying that banking credit to agriculture currently stood at N523 billion from N460 billion in 2015 representing about only 3.41 per cent of total credits to Nigerian borrowers.
Ogbeh, who assured farmers of CBN’s caution to banks against hidden charges from the loans, told farmers that there was no excuse for lagging behind in agriculture.
“CBN warns that the money is not for lending to traders and individuals that will come under the guise of agriculture or manufacturing to borrow; they will be denied credit.
“CBN has cautioned banks on hidden charges. We need to feed this nation.’’
Ogbeh also said the ministry would work out a system with the apex bank and commercial banks to ensure that smallholder farmers benefit from the loans.
Under the new policy, agricultural, manufacturing and the sectors considered as growth and employment stimulating, can now borrow long term as much as N10 billion.
However, it is at consolidated nine per cent interest rate.
The guidelines followed the recommendation of the Monetary Policy Committee (MPC) of the CBN at its 119th meeting held between July 23 and July 24.
The MPC had emphasised the need to increase the flow of credit to the real sector of the economy to consolidate economic recovery.