Jonathan frowns at Nigerian banks’ poor lending to agric, real sectors

President Goodluck Jonathan

The president threatened to withdraw banks’ access to government funds.The Federal Government on Tuesday frowned at the poor lending attitude by Deposit Money Banks (DMBs) to agricultural, mineral resources, and small and medium-scale enterprises (SME) sectors of the country’s economy.

President Goodluck Jonathan, who was speaking at the opening of the 7th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja, noted that banks were not doing enough to support the real sector despite several policies and other measures by his administration to create the environment for them to thrive.

The President warned that unless banks increased their funding to these critical sectors of the economy, government may be compelled to curtail their access to public sector deposits.

The President, who was represented by the Minister of State for Finance, Yerima Ngama, said that but for the Central Bank of Nigeria, CBN’s, intervention through financial intermediation support, such as the Commercial Agricultural Credit Scheme, CACS, and Nigerian Incentive-based Risk Sharing System for Agricultural Lending, NIRSAL, the agricultural sector would have been totally lacking of the funding necessary to grow and play its roles in national development.

He lamented a situation where banks get money from the government at zero interest rate, but continued to deny the productive sectors the required funding support, adding that if they failed to play their roles, government may be compelled to withdraw further its deposits in the banks to enable it put substantial part of the fund to support the productive sectors.

The oil sector, he said, was external to the country’s economy, as there was little it was drawing from the country to create wealth.

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Mr. Jonathan added that he would particularly want the banks to come together to do more in agricultural lending, to lift the present low capacity, to help achieve the country’s Agricultural Transformation Agenda,ATA, of making Nigeria a net exporter of food and catalyst for job creation in the economy.

“The banks must come together and see how they can put funds together to really support the farmers,” he said. “The statistics we have coming from Central Bank is that when you lend to farmers, they pay you.”

“I think we have First Bank’s experience where the percentage of the non-performing agric loans to performing is less than 1.5 per cent. So, the poor actually pay their loans. But, why are the banks always eager to go and lend to the riskier businesses than this safe agricultural businesses?

“The issue is with our psyche. We think that maybe they are not high-tech, or maybe there is too much documentation based on a loan of N50,000 or N100,000. But, as a nation, you have to look at it as your responsibility. We have to rise to that challenge and see that the banking sector should come together with a solution and no longer wait for the Central Bank to be coming with the solution.”

The banks, the President noted, needed to do more in lending to agriculture, solid minerals and the real sector, adding that unless they played their roles in a manner that suggests their readiness to support the nation’s economic development objectives, the CBN may have to introduce new policy measures that would deny the banks continued access to government deposits.

CIBN President, Segun Aina, re-assured of the Institute’s readiness to partner with government in its various initiatives aimed at deepening banking knowledge and improving delivery of top class financial services to the economy.

Mr. Aina expressed the hope that the conference would serve as a veritable platform for players in the industry to explore, share experiences and identify strategies to be pursued in ensuring that the financial services industry effectively plays its expected roles in supporting economic development.

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