Nigeria sets huge capital for Bank of Agriculture

NIGERIA plans to capitalise its state-owned Bank of Agriculture with 1 trillion naira (R43bn) and will authorise the lender to take deposits as it seeks to boost farming output and reduce food imports.

“We are looking at 25 million farmers” as stakeholders or depositors, the Agriculture and Rural Development Minister, Audu Ogbeh, said this week. “We are probably going to take a major step by the end of this year, and by February, March, have a structure in place for the changes we want.”

Nigeria’s economy contracted in the first nine months of the year as oil output dropped and prices stayed low. Farming accounted for more than 25 percent of gross domestic product, and expanded every quarter of this year. Factory output and mining, which included the oil industry, shrank, according to the National Bureau of Statistics.

The Bank of Agriculture would start lending for farming projects at an interest rate of less than 10 percent compared with commercial market rates, which were more than double that, said Ogbeh.

The central bank kept its benchmark rate unchanged at 14 percent on November 24 as it sought to support an economy forecast by the International Monetary Fund to contract 1.7percent this year while trying to curb inflation, which quickened to an 11-year high of 18.3 percent in October.

Food prices rose 17.1 percent from a year earlier, partly due to the high price of imported food after the naira lost almost 40percent of its value against the dollar after abandonment of a currency peg in June.

The government planned to distribute 110 rice mills across the country over the next two months at a subsidy of 40percent, Ogbeh said. These measures would help boost production and reduce food imports. – Bloomberg