A new report by Dataphyte, a leading media research and data analytics organisation has revealed that commercial banks’ loans and advances to the agricultural sector have remained low in the last 7 years even with several interventions by the government through the Central Bank of Nigeria (CBN) to boost loans to the sector.
According to the report titled “From Farm to Future: Thoughts on Food Security, Farmers’ Prosperity and Fiscal Stability in Nigeria” the agricultural sector employs 14.84 million persons and stands as the sector with the highest number of employees in Nigeria.
Aside from the sector being the largest employer in Nigeria, it also accounts for an estimated 26.84% of economic activities in the country. In fact, the sector is considered by President Muhammadu Buhari as the key to Nigeria’s economic diversification strategy. This alone shows how important the agricultural sector is.
For a sector this important, commercial banks’ loans and advances to the agriculture sector remains low.
Between 2014 and 2021, the highest commercial bank loan the sector had gotten in 7 years was N1.04 trillion in 2020 which was only 5.15% of the total commercial bank loan.
Dataphyte Releases “Farm to Future”; a brief on the Challenges and Potentials of Nigeria’s Agricultural Sector
In 2014, a total of 12.89 trillion was released as commercial bank loans. Of this sum, the agricultural sector received only N478.91 billion, representing 3.72% of the entire commercial bank loans.
The following 2 years witnessed a drop in the share of loans that went to the agricultural sector even though the total commercial bank loan increased.
However, since 2017, there has been an increase in the share of commercial bank loans to the agriculture sector but it has yet to reach 6% of the total commercial bank loans given despite the sector accounting for 30.6% of jobs in the country and about 26.84% of economic activities.
The CBN had announced in 2011, a ten year target of seven percent credit allocation to the agricultural sector by 2021 but this target has yet to materialise.
The research brief recommends that the country should review its fiscal and monetary policy and realign it to ensure significant improvement to access to credit for agriculture.