Mr. Abimbola Olayinka, Resort Savings and Loans Plc
Banks’ lending to the agricultural sector in the country has not enjoyed priority as expected because agriculture is yet to be seen as a profitable business.
The assertion was made by the Managing Director/Chief Executive Officer of Resort Savings and Loans Plc, Mr. Abimbola Olayinka, while speaking at a one-day retreat organised by a group of farmers in Ekiti State.
Olayinka, who spoke on the topic: ‘The Impact of Credit on Agricultural Development: Primary Mortgage Bank Option,’ noted that while agriculture remains the mainstay of the economy because of the large workforce that is engaged by the sector, lending to the sector has not been encouraging. According to him, most lending institutions are yet to accept agricultural lending as a profitable business.
“While they venture into lending to other equally risky sectors, agricultural activities have always been tagged as fraught with uncertainties of weather, natural hazards, and possible attack from pest and diseases. This is further compounded by the dearth of skills in agricultural credit appraisal, monitoring and administration in most of the banks,” he said.
He noted that explained that while the sector employ many people, majority of the farming population are small-holders.
“This category of people is severely faced with lack of financing for productive and practical engagement in commercial farming, a situation that has relegated them to low productivity, low
income, low investment and endemic vicious cycle of poverty,” he said.
He explained that over the years, the Central Bank of Nigeria and other government agencies had enunciated programmes that could provide credit for the sector, such interventions have not succeeded due to some constraints.
He also suggested that microfinance banks and commercial banks should go beyond traditional microfinance loans and offer targeted agricultural loans which are underwritten specifically based on the nature of farm income.
On how mortgage banks can help, the Resort Savings boss explained that Cooperative Housing Development Loan and the National Housing Fund Loan, which could be accessed through mortgage institutions, would provide the farmers with required collateral for loan.
“The acquired property could then be used as further equity in accessing working capital as a result of increase in the value of the [property used as the collateral,” he said.