Forex Scarcity Is Driving Boom In Agriculture – Heritage Bank

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Despite the decline in the nation’s GDP, the Agricultural sector recorded positive growth above 4% in 2016. What are the factors behind this growth?

We can say that compared to previous years, 2016 was a good year for agriculture in terms of harvest and necessary policy support. The bumper harvest recorded in 2016 accounted for part of the growth coupled with the right statements being made about government support for agriculture.

Some companies have also diversified into export market to earn foreign exchange following the prevailing scarcity of forex. Export of agro commodities is a low hanging fruit for prospective exporters and due to the opportunities presented by the devaluation of local currency, the sector witnessed new entrants which also accounted for part of the growth.

Besides the various intervention funds of the CBN like CACS, Anchor Borrowers’ Program, what other policy measures are needed to encourage banks to lend more to farmers?

By and large the ABP is succeeding but just like any good thing, there is room for improvement. I will advocate that more funds should be made available to the programme, while the ABP fund should be for one year to encourage two farming seasons for grains.

Insurance is still a big gap in agriculture, due to non-availability of data, we hardly get weather index insurance for crops while insurance companies shy away from granting insurance against theft and pilfering in poultry business.
A major gap is also the absence of functional commodity exchange, as a country we must have functional commodity exchange to mitigate this issue of wild swings in commody prices.

Despite the challenges of the agricultural sector, some banks are still making efforts to provide financing support to farmers, what is Heritage Bank’s experience in this regard?

We are very active in agriculture and small medium enterprise (SME) not only through provision of financing but also advisory services. Advisory services come under intangibles but it means a lot as information is power. We have done extensive trainings on value-chain financing for various agro commodities, which provides the needed skills set to play in the sector.

We have also done extensive mapping of commodities to location such that we can advise our customers about availability of commodities across the country in any specific period. Whether your focus is Soyabeans, moringa seeds, chili pepper, hibiscus flowers, gum Arabic, nutmeg, sesame, maize, garlic, dry ginger, wheat, cashew, cocoa or cassava, we have the database to cater for exporters or local manufacturers that want to play in any sector.

By focusing on value-chain finance, it helps in providing a helicopter view of events. For example, if l have a poultry farmer in my book, l can easily finance association of maize or soybeans farmers and ensure linkage to the poultry farmer. Our development finance partners such as CBN, BOI and NEXIM have been supportive in providing on-lending support for our agribusiness portfolio.

Agriculture needs patient capital, ability to stay the course and different skill sets in credit evaluation, so focus is also on continuous learning. Through constant exposure to good agricultural practices and modern approach to farming, we have been able to mitigate our risks and be deliberate in our actions.


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