FG Seeks N500bn To Revive Bank Of Agriculture

The Bank of Agriculture (BOA) has begun talks with its stakeholders to raise between N500bn and N1tn to revive the bank which was established to provide credit facilities to support all agricultural value chain activities in the country.

The BOA is owned by the Nigeria government through the Federal Ministry of Finance Incorporated (MOFI) and Central Bank of Nigeria (CBN) in the ratio of 60 per cent and 40 per cent respectively.

The Managing Director of the BOA, Alwan Ali Hassan, told THE WHISTLER in an exclusive interview that the bank is in dire need of recapitalisation and restructuring in order to continue with its mandate of agriculture financing.

In the midst of hardship, the government is scrambling for avenues to reduce the rising food prices. Food inflation was 35.41 per cent in January 2024, from 33.93 per cent in December 2023.

Hassan told THE WHISTLER that, “The Bank of Agriculture is undergoing the restructuring and recapitalization right now, and we need a lot of money. The government is ready and planning to give us money so that we can be able to service the public.

“Being a development financial institution, it is expected that capital will be replenished because, one; inflation comes in, two, you have some backlogs to take care of and three, the biggest worry is the perception that people have about establishments owned by the government.”

The MD told THE WHISTLER that the Ministry of Finance has 60 per cent shares in the BOA while the CBN has 40 per cent but he said that the CBN has only funded 9 per cent out of the 40 per cent shares allotted to it.

Consequently only nine per cent of the capital of the bank came from the CBN while the remaining 31 per cent has not been settled. This may have limited BOA’s ability to provide financing to farmers.

Hassan said, “Of recent, there have been talk of the CBN taking their investment out and you bring in other agencies or private individuals because of the fear that you can’t be an investor and regulator at the same time. The 40 per cent of the CBN is an allotted per cent and what they have paid is just about nine per cent of their capital of the bank.

“So, they might stay with that nine per cent and the allotted 31 per cent they have could be taken to the public or perhaps the Nigerian Sovereign Investment Authority (NSIA) might come and take that per centage and we are in talks about that.”

The MD told THE WHISTLER that the bank is targeting at least N500bn recapitalisation. The amount would come in tranches of N100bn and N200bn.

He said, “All we’re looking for is N500bn, but it will not come in one day, it will come in time, and we can start with N100bn, N200bn. Gradually we move up the scale, because there’s a lot of requests and demands for the services, and no money is enough for this kind of services.”

As part of the restructuring process, Hassan said the committee which was setup by the government under the leadership of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun is seeking for ways to raise half of the N500bn capital from the Ministry of Finance Incorporated or other government agencies.

According to him, the remaining N250bn will be raised at the capital market.

Hassan said, “A high level inter-ministerial committee was set up by the federal government about a month ago (January 2024) to see how we can change the narratives of the bank. Like I said, inflation has come in so, the money that has been invested when you start changing from naira to dollar investment is not much. So, the government is saying from N150bn capital, the bank should be recapitalised to N500bn perhaps N1tn whatever it is.

“About N250bn could be from the Ministry of Finance Incorporated and any other government agency that wants to invest. The other N250bn will go to the market and we raise it in the capital market. But that is at the discretion of the government.”