The Federal Government has earmarked about N200 billion as loan to stakeholders in the agriculture sector. When this money is eventually disbursed, it will be done through a government institution like the Bank of Agriculture [BOA]. This write-up shows how farmers can potentially succeed in getting a loan from the BOA. We spoke to sources at BOA in Lagos and Abeokuta who sought anonymity but gave illuminating information.
Bank of Agriculture [BOA] is Nigeria’s apex agricultural and rural development finance institution. It is 100 percent wholly owned by the Federal Government of Nigeria. The ownership structure is – Central Bank of Nigeria (CBN) 40 percent and Federal Ministry of Finance Incorporated 60 percent. Bank of Agriculture Limited is supervised by Federal Ministry of Agriculture.
The Bank was incorporated as Nigerian Agricultural Bank (NAB) in 1973 and in 1978, was renamed Nigerian Agricultural and Cooperative Bank (NACB).
Subsequently in 2000, it was merged with the People’s Bank of Nigeria (PBN) and took over the risk assets of Family Economic Advancement Programme (FEAP) to become Nigerian Agricultural Cooperative and Rural Development Bank Limited (NACRDB, a name that has always be considered too long and unwieldy.
A plan to reposition the Bank into an effective and sustainable national agricultural and rural development finance institution in 2010 led to a further name change to Bank of Agriculture Limited.
Bank Of Agriculture’s Services
BOA provides affordable credit facilities to segments of the Nigerian society who have little access to the services of conventional banks. BOA accepts savings deposits from customers and encourages banking habits at the grassroots.
BOA augments government’s efforts in the diversification of the productive base of the national economy while promoting capacity building through the provision of relevant training and advisory services, encouraging the formation of cooperative societies at all levels, and fostering accelerated growth and development of the agricultural and rural sectors of the economy.
How To Access BOA Loan For Your Farm
The Lagos source says, “You will have to first open an account with the bank, the normal requirements are: complete and signed account form; complete mandate and signed card; 3 passport photographs, recent copy of your utility bill; a signed letter to the bank; a photocopy of means of identification and a minimum of N3, 000 deposit. “You must have that account running and active for at least 3 months, not that you just open the account and abandon it, only to show up when you need loan.
“Also, you have to make sure your farm records are properly kept; that is you keep records of the farm’s activities/events on a daily basis.
“You must also know your onions because when you are attended to, you’ll have to show a proper knowledge of your section of the agricultural sector, i.e., you must be able to display hands-on experience in farming with information about your farm.
“Thereafter, the bank will pay a visit to your farm site to see what you have on ground; to see how you are already doing; to ensure that the loan is appropriate for what you want it for. In other words, they will advice you on the loan based on what they have seen on ground”.
The Abeokuta source says, “The first thing is to go for enquiries and possibly open and run an account at any branch of BOA that covers the area or local government where your farm is situated.
“You have to open an account at any of BOA’s branches – with your four passport sized photographs and your first deposit. The amount to deposit in the account differs from one branch to another, but with us here in the Abeokuta branch, we accept N3000. Then you have to present your “NEPA” bill (that’s compulsory) and any mode of identification – whether your national identity card, voters’ card or international passport. Not that alone, you will have to run the account for a period of six months. So, after six months, you can now apply for loan.
“The running of the account within a period of six months does not require you to deposit a specific amount – just make sure you save and withdraw money, the same way as you would if you are running your normal account in other banks. It shouldn’t be that you just save the first deposit and then abandon the account; and after the sixth months, you go there to apply for loan form. Though, it is not that you won’t get the loan after you’ve abandoned the account, it is just that the bank may be doubting your integrity as to paying back the loan if granted. Also, we will have to pay you a visit at your farm for inspection.”
How Long Do I Have To Wait Before My Request For Loan Is Approved?
The Lagos source says, “You really don’t have to wait forever. All you do is: after opening an account with us you start running the account, make sure it is very active; that is, there should be transactions going on in the account. You don’t have to wait until you are asked to come and pick up your loan before you start to make deposits and withdrawals.
“Also, based on your relationship with the bank, as you come in, we visit your farm. If we see progress of work/project on ground, it won’t be long; your loan will be approved. It could take between one week to one month, but like I said, we will not just throw money at you; we must ascertain that you have a project you are working on and after inspection we start to process your money”.
The Abeokuta source says, “You will have to wait for a period of six months – within that period, you are supposed to be running the account, giving the bank confidence in you”.
What Categories Of Farmers Are These Loans Meant For?
The Lagos source says, “We have various schemes for all in the value chain, from production to marketing. Now, even if you are into marketing of farm produce, equipment, whatever you do in the value chain of production, we will give you loan based on what I have discussed earlier. We even have a scheme for youth between the ages of 18-40. The loans in this scheme can be up to N250, 000 and are collateral-free, “But we will have to come and inspect what you are working on and your account must be active”.
The source adds, “To be sincere, our loan at BOA is for all kinds of agricultural pursuits including arable or field crops farmers, fisheries, horticulture, agro-processing, livestock, agric produce marketing, tree crop production, among others. We can as well give loans to non-agricultural activities such as, traders, artisans, and others”.
What Is The Minimum Or Maximum I Can Get As Loan?
The Lagos source says, “The maximum or minimum you can get is based on the project you are working on and subject to approval by the bank management, but with collateral of landed property. But for the youth scheme you can get up to N250, 000 for your project without collateral.”
The Abeokuta source says, “The bank has its certain amount of money to disburse as loan – so for our Micro Loan, you cannot borrow more than N250,000, as maximum amount for individuals and the collateral is to provide two guarantors – a civil servant and one other person. Also, you are supposed to have 20 percent of the amount you want to borrow in your account – that is times five of your initial deposit”.
BOA Loan Conditions
Lien Deposit: 20 percent
Minimum Customers’ Account Relationship: 6 months
Interest Rate: 2 percent
Fixed Deposit: Negotiable
Accessing BOA Loan As A Cooperative
The Abeokuta source says, “That is to say you would have registered as a cooperative society after which you will present your Memorandum of Association to the bank, while the three executives – the Chairman, Secretary and Treasurer will be the signatories to the account; they are also responsible for opening the account on behalf of the cooperative. This acceptable cooperative or group should have as standing members, a minimum of five and a maximum of ten. If they are not up to five members, they are not a cooperative and when they are more than ten, they will be separated to form another group or cooperative. That is to say if you are a cooperative of 50 members, you will have five groups; you will bear the same name, but be separated into different groups.
“Note this: the cooperative will run its account the same way and manner an individual runs their account for a period of six months before they can be privileged to get loan. You know as a cooperative, it is individuals that will borrow money, so the account must have 20 percent of the amount each member wants to borrow – making up a group. For instance, if the total amount which members of a group want to borrow is added together – N200,000 multiplied by ten members, that is N2 million. So, they must have 20 percent of that N2 million (N400,000) in the group or cooperative’s account. The issue of guarantor doesn’t seem to pose a problem here, they use what is called “Cross Guarantor Method”, as the three signatories will stand for the cooperative – we will have to hold them responsible if the cooperative defaults”.
More On Defaulters
The Abeokuta source says, “For individual or group defaulters, one thing is that interest will be going on the loan and whether you like it or not, you will still pay back. Another thing is that the money in the account is still yours, even after you might have paid back the loan. You can still use that money (20 percent) to apply for another loan. If for instance, you just paid back the sum N100,000 with the N20,000 in your account and you want another N200,000; you will just add 20 percent of the remaining N100,000 to make N40,000 for you to apply for N200,000. But when after the expiration of the loan and the person defaults, the 20 percent will be transferred to reduce the loan. This is because we are applying “Reducing Method” for our loan system, as the remaining money (balance) on the ledger or in the account is what the interest will dealing on. So, they will be working interest on the money in the account, not on the loan the person fails to pay – as it is reducing the liability”.
BOA Loan For Cassava Growers
The Lagos source says, “Yes, there is yet another loan scheme for the Cassava Growers’ Association. There is a Memorandum of Understanding between BOA and this association. So, if you need this loan, you will have to join the Cassava Growers’ Association. It is this association that will present the list of members who are interested in our loan to us. Meanwhile, the association itself would have gone through some procedures in ascertaining the authenticity of the members – the association has to make sure that the member really has a cassava farm.
”So, if some people whose names we have on the list now come to get loan form from us, the normal procedure for giving out loans will be followed – having two guarantors of one civil servant and another person; we will go to their farms to see things for ourselves, whether all the information they’ve given us is true or not, after which we will now make our own recommendation – but they don’t need to run an account with us for six months.
“However, if after we have cross-checked we find out that someone does not have cassava on his or her farm, we won’t place such person for disbursement with the Cassava Growers, but with our own loan, simply because there won’t be anything to write a report on. I, hereby use this medium to advice people that it is better to apply for our loan”.
Go to BOA website: www.bankofagriculture.com . The branch location application will ask you to select a state from the 36 states in Nigeria and when you do, the location of BOA branches in that state will be shown to you together with addresses and telephone numbers. BOA has over 200 branches nationwide.