Agricultural Loans: The area of finance stopped people who wanted to go into large or small-scale farming has passed. Respite came to farmers with the Federal Government’s intervention loans and grants for agriculture. And as such, the sector has over the years witnessed high influx, as many have tapped into it, as a replacement to the quest for collar jobs.
The Nigerian government has even made a paradigm shift from oil and gas to agriculture. Hence, the government has made available, grants and loans to encourage people to go into this sector, that has been earmarked as a goldmine.
Agriculture in Africa, especially Nigeria has been reported to be untapped and a recent report revealed that Nigeria has about 84 million hectares of arable land, of which only about 40% has been cultivated. That shows that the sector is lacking manpower and to that effect the clarion call to join and become self-employed and even employ others through agriculture, either crop cultivation or livestock farming.
So, the problem is no more the capital to start up, rather the idea of the type of agricultural business to venture into. The Nigerian government in a bid to enhance the development of the agricultural sector set up the following schemes and programs:
(1) CBN Agricultural Loan
This loan scheme was set up by the federal government to provide low-interest loans to farmers in Nigeria. To achieve this, the Central Bank of Nigeria (CBN) has recently approved the disbursement of about 75billion naira as the loan to farmers and cooperative societies in the 36 States and the Federal Capital Territory (FCT). This loan can be accessed directly from the Bank of Agriculture.
(2) Bank of Agriculture (BOA) Loans
The Bank of Agriculture is the main channel that the government uses to provide loans and grants to the public. The bank is owned by the federal government, with the Central Bank of Nigeria and the Federal Ministry of Finance incorporated as shareholders. The bank’s activities are controlled by the Federal Ministry of Agriculture and Rural Development. When thinking of government loans, the BOA should be your first choice.
Requirements for Bank of Agriculture (BOA) loans:
(a)You must have maintained a minimum customer account relationship for about six months.
(b)You must have deposited at least 20% of the required loan amount into the account.
(c)You must provide collateral, excluding land.
(d)You must submit a detailed business plan.
However, the requirements for obtaining a loan are subject to negotiations and may depend largely on the feasibility of your agricultural venture. Further details about the BOA loans are available on the BOA website.
(3) Agricultural Co-operative Societies
The easiest and surest means of securing agricultural loans is through cooperative societies. Credits given to these communities come as grants. As a rule, the cooperative societies could be provided with the grants by the banks who will then distribute it to each member on the basis of contributory payments. Some of the most important agricultural cooperatives that you can join to access loans are: All Farmers Association of Nigeria (AFAN), Youth Empowerment in the Agricultural Program (YEAP), FADAMA etc.
Although this also have requirements that should be met too before the facility will be given such as;
(a) You need to form a cooperative society.
(b) Submit a loan application by writing with the cooperative letterhead to the bank.The application should be signed by the cooperative’s representative.
(c) Submit a detailed feasibility study on the business.
Also, there are other means of securing facilities for agricultural business apart from the aforementioned. The federal government through the Bank of Agriculture and the bank of industries have partnered with different commercial banks to help farmers with the acquisition of loans. Some of the commercial banks you can approach to access loans are: Union Bank; First Bank; Zenith Bank; UBA; Stanbic IBTC.
Meanwhile, there are requirements individuals or co-operative societies should meet before the facilities will be availed to them for agricultural purposes and they are;
(i) Open an account with the bank; Submit a loan application.
(ii) Deposit at least 10% of the total money you applied for.
(iii) Provide the bank with collateral.
(iv) Provide a detailed business plan with a complete feasibility study.
For more information on available government loans from commercial banks, you can contact any branch of the bank in your area for more information.
Therefore, in boosting the economy of the country through agriculture, the federal government has done their part by making funds available. So, to play your part you need to think out and act out. Agriculture is your roadmap to wealth creation and the country’s topmost profitable sector, as the largest employer of labour.