Sterling Bank’s intervention plan targets smallholder farmers in Nigeria

In line with its intervention plan for five focal sectors in the Nigerian economy, Sterling Bank Plc has earmarked 10 percent of its total loan portfolio to provide funding for operators in agriculture. Other sectors marked for intervention by the bank are health, education, renewal energy, and transport.

The move is in recognition of the social impact of agriculture, as well as the sector’s economic potential and significance – it is the largest employer of labour. Also, over 80 percent of the players in the sector are smallholder farmers, thus, the bank is looking to help farmers by making their businesses “bankable and profitable”.

The bank’s Group Head for Agriculture Finance and Solid Minerals, Bukola Awosanya, said that the bank’s dedication to the sector was based on a commitment to help farmers and ensure that the value chain is properly tied end to end. She made the disclosure at a recent forum on commodity value-chain investment and agribusiness support initiative, through Public-Private Partnership (PPP).

Despite the huge potentials in Nigeria’s agricultural sector, the country has been unable to fully grasp the benefits with production remaining at a subdued level and farmers having little access to funding. The bank’s executive highlighted some of the hindrances to agriculture financing by lenders to include the absence of good agricultural practices as well as bad weather.

“We want to encourage farmers but if the input is bad, the output will fall short of expectations. For instance, poor seed quality is an issue; lack of infrastructure such as bad roads is also an issue because it makes distribution of the harvest from the farm to the market difficult,” Awosanya said.

Poor farmer education coupled with the failure of farmers to repay loans further complicate the issue. On this, Awosanya urged that farmers are trained on the need to always repay a loan because when loans are not repaid, banks will not be encouraged to lend to them again.

Another challenge is inconsistency in government policies. Awosanya explains that “after the bank has concluded arrangements to finance some farmers, the government may decide to lift a ban on the importation of the commodity. What happens to the ones you have done? So government policy is also a problem in agriculture.” Instead, she charged the government to address the fluctuation of prices which makes financing agriculture a problem.

Sterling Bank’s intervention for farmers comes amidst recent discussions on commercial banks performing their role of providing credit to the private sector for economic growth.

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