FG May Sell BoA’s Bad Loans to AMCON

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James Emejo in Abuja 

The Minister of Agriculture and Rural Development, Chief Audu Ogbeh has indicated that farmers would be given the opportunity to acquire shares of the Bank of Agriculture (BoA) within the next three months when its privatisation processes is expected to have been concluded.

It also emerged that the Asset Management Corporation of Nigeria (AMCON) and other related risks takers may consider taking over the existing bad loans of the BoA at a discounted rate. This is to allow the new management team that would emerge after the recapitalisation to have a clean balance sheet to allow for a fresh start.

Speaking at the kick-off meeting for financial advisory services for the restructuring and recapitalisation of the Ogbeh, stressed that there could be a new management team of the bank by May.

He said the federal government has a new vision for agriculture, part of which is to create a farmers’ bank.

The minister said a new arrangement was expected to make the BoA a strong instrument in making the agricultural sector of the economy stronger.

“And we urged everyone to pass the good news to farmers that this a chance to become co-members, owners of the bank,” he said.

He said government would soon write to farmers and sensitise them to buy the bank’s shares- a conscious effort to discourage abuse of its lending system as farmers tend to have a sense of ownership. 

Ogbeh, said the Bank has to support growth as the country needed to create jobs for the growing population of youths.

He said: “What we doing is a big leap forward. By end of May, there will be a new management. Let’s have a strong bank, a farmers’ bank.  

Also speaking, the Minister of State for Agriculture and Rural Development, Senator Heineken Lokpobiri expressed happiness that the eventual privatisation and recapitalisation of BoA was becoming a reality, though at the tail end of their tenures as minister. 

He noted that effort to reposition the bank was spearheaded by both ministers from the inception of office.  

He said it had become a sad tale to compared the BoA with the Bank of Industry (BoI) as the latter is well capitalised and performing well while the former had been lagging behind even though both are owned by the Federal Government.

He said: “We are not surprised because before this government came, agriculture was not being given priority attention but now that everybody had realised that there is no more money to import food, we have policies today that tend to create jobs through the agricultural sector and then substitute for import. We have a policy that instead to be importing food, we should be exporting food.”

He added: “Today, we believe that if the BoA is fully recapitalised, it will be able to compete with other banks and that will attract other banks to also doing business in respect of agriculture.”

Also, speaking at the meeting, Director General, Bureau of Public Enterprises (BPE), Mr. Alex Okoh, said a final sum for the bank’s recapitalisation had not been ascertained as the level of liabilities was still being evaluated. 

He, nevertheless, gave a tentative figure of about N200 billion.  

According to him, although the modalities were still being worked out by the appointed financial advisor, the federal government envisages a new holding structure where the Central Bank of Nigeria (CBN) holding would be reduced to about 20 per cent while that of the Federal Ministry of Finance Incorporated will be reduced to about 20 per cent.

He added that government agencies equity in the new bank would be a minority of 40 per cent while private sector investors would be invited to own a further 20 per cent.

Okoh said the remaining 40 per cent stake would be owned by the farmers and farmers’ comparative.

He added: “So between all the private sector equity participants of the bank, we have a preponderance 60 per cent and so that makes it essentially a private sector bank.”

The BPE boss also said there was a consideration that, “eventually some of these shares will be listed on the stock exchange so that the bank can then subscribe to the strict corporate governance rules and regulations of a privately managed and oversighted institution.”

He said following the approval of the National Council on Privatisation at its first meeting of 2019, the kick-off meeting became necessary to formally execute the agreement with and introduce the appointed adviser- Lead Capital Consortium to all the key stakeholders of the project. 

The meeting further provided an opportunity for all parties to deliberate and agree on any outstanding issues pertinent to the success of this assignment. 

However, the scope of work for Lead Capital Consortium included review of financial due diligence; implementation of restructuring programme; and recapitalisation of BOA.

This assignment, which commenced on 16th April, 2019, was expected to be concluded within a period of 90 calendars days. 

He added: “We envisage that upon conclusion of this assignment, BOA will be restructured, recapitalised and properly positioned to make positive impacts in the agriculture sector by providing low cost credit to small holder and commercial farmers and small and medium scale rural enterprises.”