Experts seek reduction in lending rates for agribusinesses

Senior Advisor, Agriculture Finance, AFOS Foundation-Germany, Dr. Michael Marx has advocated that only interventions leading to a sustainable reduction of operating costs will have a sustainable effect on the lending rates of the financial sector to improve agribusinesses in Nigeria.

The financial and agriculture experts made their positions recently at the  fourth yearly Symposium of Nigerian Microfinance Platform themed: “Serving the agricultural sector through micro-banking”, in collaboration with LA FAYETTE, AFOX, LAPO Microfinance Bank limited, Accion Microfinance Bank and NPF Microfinance Bank Plc in Benin City, Edo State.

Presenting a paper with topic, “Perspective of serving the agricultural sector through microfinance banks”, Marx said AFOS initiative in agricultural finance is aimed at supporting Microfinance banks (MFBs) and agribusinesses in Nigeria.

Marx who decried that a bigger chunk of agricultural finance will continue to come from the commercial bank, urged the Central Bank of Nigeria (CBN) to increase the loan ceiling for MFBs from N500,000 to N10 Million to compensate for inflation and allow for financing of farmers groups and value chains operations.

He noted that there is a great potential and interest in some MFBs to expand agricultural lending and implored the Central Bank of Nigeria (CBN) to offer refinance for term loans (1-3 years) in Naira to MFBs to enable MFBs lend for small equipment, without policy strings attached.

Marx also called on the Central Bank of Nigeria(CBN) to request MFBs and Micro-Finance Institutes (MFIs) to express their interest rates and charges as Annual Percentage Rate (APR).He added that micro-lending will certainly remain the domain of MFBs noting that the big questions are areas  of competence, capacity to serve and interest.

Marx said the goal of AFOS Foundation is to enhance the efficient management of local agricultural value chains and related food production and processing industry as well as improve the performance and outreach of the MFB-subsector by developing new dual vocational training systems in the agricultural sector and conducting training and providing technical support for accelerated lending for agricultural purposes.

Managing Director/Chief Executive Officer ,LAPO Microfinance Bank, Dr. Godwin Ehigiamusoe harped on the need for greater engagement between the MFBs and the CBN’s Development Finance Officers (DFOs) at the State Level and the continuous capacity building of Microfinance institutions on agricultural finance.