The Managing Director of the Bank of Agriculture (BOA), Alwan Ali Hassan, has outlined his strategic plans and priorities for reviving Nigeria’s agricultural sector in an exclusive interview with THE WHISTLER. Hassan, appointed in 2020 amid the COVID-19 pandemic, is tasked with ensuring food security and driving agricultural growth through the bank’s financing initiatives.
In this candid discussion with THE WHISTLER, the BOA MD delved into the bank’s efforts to manage overhead costs, combat loan defaults, and the impending recapitalisation process. He also revealed the three key requests he made to President Bola Ahmed Tinubu during a recent meeting to revitalise the agricultural sector.
Excerpt…
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What Is Bank Of Agriculture’s Plan For 2024?
The bank is being repositioned to make sure that it is ready and capable of giving support to the Nigerian farmers so that we can ensure food security and food availability and have good nutritious food for the public.
How Have You Been Able To Manage BOA’s Overhead Across Your Over 110 Branches?
We had about 150 branches and we scaled down to about 110 and then also, we also looked at the area of energy. We try to make sure that we don’t just waste energy, especially diesel when it’s not needed. We have started deploying alternative energy to our branches, I mean solar energy so that we can save on diesel and petrol.
Then also in terms of movement, we encourage carpooling. For instance, if all of us are coming to Abuja for a meeting, we can use two cars, or three people in a car, instead of one person coming in one car. All these are ways to cut down on overheads, and it has helped a lot.
Are There Plans To Further Cut Down Number Of BOA’s Branches?
No, we have three per state, and if anything, we need to do is to even see how we can have agency banking for where we are not present, so that people can be able to access our services and products. We have no plan to cut more branches now.
The Primary Mandate Of The BOA Is To Finance Farmers. How Much Have Been Disbursed Under Your Leadership?
We disburse loans, virtually, I would say, daily, because the loans request comes on time-based. Everybody has the right to apply for a loan, and when you meet the criteria, we disburse loan to you.
So, it’s not something that we say we do daily or weekly, no. As the time arises, we disburse loans. Both micro, small, medium, and large enterprises.
What Area Or Value Chain Have Received More Of Your Interventions?
Our loans have gone mostly to the primary protection side. Yes, because most of the smallholders of our loans are in that area.
How Are You Battling Loan Defaults?
Loan default is a big challenge, and what we have tried to do is that in the last four years, we have implemented mandatory loan insurance. This ensures that in case of natural disasters, we can recover some losses from insurance companies.
Two, we try to make sure almost all our loans have collateral so that if there’s any default, we sell your property and get our money back. So that has been our way forward now in terms of making sure that we reduce the exposure of bad loans in the banks.
Recently, we said we might not take farm lands as collateral, especially in areas where someone from Abuja may not be willing to go and own farmland in say Kano or Kebbi States. So, we will demand houses or other assets. For the smallholder farmer, even the house that they own in the village is not of much financial value. So, we ask them to come and do cluster bases and we get the district head to come and guarantee their loans. Even though we are trying to provide social services, we need to operate the bank and pay salaries. We must pay government levies. We need to have a cashflow and a profit and loss statement.
At the meeting I had now (with the president), three things were of concern to the president. One is the issue of funding, he asked how much we need and I said I need so much. I need hundreds of billions. He asked what is your second challenge and I said security. I need people to go to their farms freely and comeback home freely and peacefully. Number three, I emphasized the need for strong partnerships with large commodity companies to be off-takers.
Does BOA Plan To Increase Capitalisation And Raise Funds In The Capital Market?
Yes, the Agri sector is a very large industry. No money is enough for agriculture. So, the Bank of Agriculture is undergoing structural capitalization right now, and we need a lot of money, and 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. They believe that the money may not be a loan, that it may have been a grant from day one. So, that challenge alone is the biggest challenge that mots Agric banks all over the world face.
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 to them and what they have paid is just about 9 per cent of their capital of the bank. So, they might stay with that 9 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.
How Much Are You Looking At? N1tn Or Less?
No, it’s just a way of talking, it’s just that 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. Even land preparation alone can take a lot of money. To convert a forest into a family land, it needs a lot of money.
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 government is saying the bank should be recapitalised to N500bn per harps 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.
Are You Also Targeting The Capital Market For Funding?
That would be later. Later, the bank will go to the private market for those who want to come in. The CBN can reduce her equity. Even the federal government can reduce her equity. But it might not be actually a reduction, it can just be like a dilution. It’s a bit of dilution.
What Is New About The Governance Structure Of The Bank?
Recently, we added two Non-Executive Directors who are going to be independent directors. They will be selected either by the Institute of Directors or way or the other. They will come here as independent directors. They don’t have to won a kobo or share in the bank but they will be people that have worked and have made name that you can say ‘this guy knows his onion and he should be at the bord of the bank.’ The criteria will be that the person must have worked in the Agric value chain sector, financial sector or governance structure of the country.