Financing Agriculture And Non-Oil Exports

The Bankers Committee’s decision that all deposit money banks (DMBs) in the country should, every year, set aside and pool together five (5%) per cent of their Profit After Tax (PAT) for financing agriculture and non-oil exports is a very commendable one. The plan is to support agricultural and import substitution policies of the government as well as the drive towards diversification of the economy. According to reports, the banks would use the pooled funds to be kept in the Central Bank, controlled and administered by the Bankers Committee, to make equity investments and not loans in companies that operate in the agricultural and non-oil export sectors. Banks would, therefore, not charge the companies interest but would be rewarded by sharing out of the dividends declared by the companies. A maximum period of 10 years was agreed for banks to exit from companies they financed. The Bankers Committee would set up a Project Review Committee that would, among other things, assess applications from companies desiring to benefit from the scheme, make recommendations to a Board of Trustees of the Bankers Committee. The scheme would commence in 2017 using funds, estimated at N25 billion, from banks’ 2016 financial statements.

The scheme promises filling the huge financing gaps that exist in the target sectors of the economy, significant reduction in cost of funds for the beneficiary companies, improvement in the country’s productive and export capacities, employment creation, poverty reduction, enhanced foreign exchange earnings and foreign reserve. Overall, the scheme promises to impact positively on the economy and hence the economic and social well-being of the citizens. These benefits however, can only be expected if the recipient companies would be efficiently and effectively managed.

But it is good to remind Nigerians that the country has travelled the route the Bankers Committee plans to take it through again some 17 years ago, without any concrete and sustained benefits there-from. Given that there is not much conceptual difference between what the Bankers Committee was reported to have agreed to do and what it did in the past, stakeholders must feel concerned regarding the recent initiative.