The federal government says it is restructuring the Bank of Agriculture (BOA) to improve its operating framework and governance structure to enhance its efficiency.
The Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh, said this on Tuesday at the opening meeting for the recapitalisation of the Bank in Abuja.
Mr Okoh said the restructuring became imperative because the bank has performed below expectation since its inception in 1972 due to a myriad of challenges.
“The process of recapitalisation will lead to the privatisation of the equity of the bank,” Mr Okoh said.
He said government envisages the total equity shareholding of its agencies in the bank, namely the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance (incorporated) will reduce to 40 per cent.
After the reduction, he said the bureau will then invite private sector investors to take up 20 per cent of the shares, while the remaining 40 per cent equity will be owned by farmers and their cooperatives.
Mr Okoh stated that the new strategy envisages that BoA would be transformed into a true agriculture finance bank modelled after the Agriculture Bank of China and Rabobank of the Netherlands.
“Upon its establishment in 1972, the bank was to serve as an agricultural and cooperative bank to provide services of a development finance institution. It was vested with the responsibility of providing low-cost credit to smallholder and commercial farmers,” he said.
However, the DG lamented that the bank was unable to realise its responsibilities due to its current structure.
The proposed restructuring and recapitalisation of the bank, he said, are to transform it strictly into an agricultural finance bank with branches in all the local government areas and major towns in Nigeria.
The director-general said the model will encourage farmers to form clusters of cooperative and thrift societies throughout the country’s six geopolitical zones so that they can participate in the ownership of the bank.
Mr Okoh said the model would fundamentally ensure the BOA becomes a farmers’ bank owned by farmers.
On the sustainability of the strategy and the capacity to attract investment, the BPE DG said measures would be put in place to take non-performing credit facilities off the balance sheet and books of the bank and possibly sell off to a factor agent.
He said the measure is to make the bank attractive to investors and also attract cheap funding from multilateral development institutions and other institutional investors with a focus on agricultural financing.
Mr Okoh commended the Minister of Agriculture & Rural Development, Audu Ogbeh, who doubles as the Chairman of the Steering Committee for the Project, for his passion and commitment to the development of agriculture in Nigeria.
He congratulated Lead Consortium – the adviser for the transaction, and said upon conclusion, BoA would be placed on a platform to optimise its potential to impact the nation’s natural endowments for arable farming.
Last December, the Supervising Minister of Finance, Zainab Ahmed, disclosed that about N10 billion was set aside by the government to recapitalise the bank and make loans available to farmers at single digits.
The minister said this was part of government’s strategy to make funding available to support farmers in the country.