By Babajide Komolafe

Minister for Agriculture, Dr Akinwunmi Adesina has called for the issuance of long term bond to provide loans to farmers at single digit interest rate.

He made this call at a workshop on “Financing the Agricultural Revolution” organised by the Securities and Exchange Commission (SEC) held in Lagos on Friday.

Adesina said that the on-going transformation in the nation’ s agricultural sector has created huge demand for affordable funds, which exceeds what can be provided under NIRSAL.

“Today there is a positive investment climate for investment in agriculture in Nigeria. The sector however needs long term finance at single digit interest rate but it offers potential interest rate income of about N400 million to investors.

He said for example the Ministry is about to introduce a scheme to raise 760,000 young commercial farmers in the next five years, and the funding requirement for the scheme is about N3 trillion. He said that research studies show that the Nigeria agricultural sector has a potential of $99 billion and this is expected to increase to $250 billion in the next 2020 years.

He said that in recognition of the potential of the sector, there has been increased private sector participation in recent times, with over $8 billion attracted in the last one year, with the World Bank alone offering funding support of $500 million, and the African Development Bank (ADB) pledging $250 million.

Similarly, banks’ lending to the sector has improved from one per cent of total lending to three per cent in recent times.

He said that despite these, the funding needs of the sector is far from been satisfied. “This requires that we think out of the box. We need to raise long term bonds to support the agricultural sector. The Asset Management Company of Nigeria (AMCON) and Pension Funds Administrators (PFAs) should invest in agriculture to provide long term funds at single digit interest rate.”

He said that the Ministry on its part has commenced moves to facilitate long term funds to the sector. The Ministry, he said, has set aside $3 million to set up a venture capital company to lend to seed companies and as time goes we would   add another $3 million.

“And we are also attracting other investors so that we can grow the fund to about $20 million to provide funding support to seed companies. They don’t have to go to banks to get access to financing to get processing equipment.”

He disclosed that in addition to this, the Ministry is working with the Tony Elumelu Foundation to set up an apex fund for agriculture in the country.

“Furthermore the President, just two weeks ago, directed that the Bank of Agriculture be restructured and recapitalised to lend at single digit interest rate.