Posted by From Josephine Lohor in Abuja on
The Federal Government would next week Monday begin the actual payment of N1.33 trillion owed local contractors, just as it has intensified efforts to exit from.....
The Federal Government would next week Monday begin the actual payment of N1.33 trillion owed local contractors, just as it has intensified efforts to exit from the debt it owes the London Club having successfully exited the Paris Club.
The Minister of Finance, Mrs. Nenadi Esther Usman, who made these disclosures yesterday at the forum for economic stakeholders on 'Gro-wing the Nigerian Economy", also accused State governors of stalling the development of agriculture by their failure to contribute N7.2 billion to the Agriculture Credit Guarantee Scheme Fund (ACGSF) and also set up implementation committees.
Speaking on the London Club debt and debt owed local contractors, Usman, in what could be described as her first major outing since taking over as minister, noted that 'having successfully exited the Paris Club debt, one of our immediate preoccupations is to conclude the process of selecting a reputable financial institution to handle the restructuring of our London Club debt.
'More importantly, we are now in an advanced stage to ensure the payments of debts owed our small local contractors. In fact, the actual payments would commence on Monday next week. This payment is a considered measure to reflate the economy and stimulate production and consumption in order to achieve our target growth rate".
Speaking on the ACGSF fund made available to Nigerian farmers at a concessionary rate of 14 per cent, she regretted that 'despite all these achievements, we are faced with some challenges. As of yet, the progress made in the approval and disbursement of the N46.7 billion available has been rather slow. Current figures from the Central Bank of Nigeria indicate that only 389 applications for loans amounting to N15.13 billion have been received. Unfortunately, only 44 loans amounting to N7.1 billion have been approved. Therefore to date, only 15 per cent of mobilised funds have been allocated to farmers".
The minister added that 'this slow progress has been attributed mainly to the low levels of participation in the scheme by the state governments and commercial banks. The state governments are yet to contribute their expected share of N7.2 billion to the fund.
"Furthermore, many of them are yet to set up their ACSS State Implementation Committees, which could have assisted in improving the awareness of the scheme within the farming communities around the country. To this end, stakeholders should increase pressure on the states to ensure that they set up their committees as quickly as possible".
While disclosing that the Executive would seek the approval of the National Assembly for extra spending on infrastructure that would ensure increased agricultural activity in the country, she recalled that 'in the past our farmers had found it difficult to access credit from commercial banks, particularly when compared to other sectors of the economy.
"This has been partly due to weakness in the financial institutions, particularly a failure to develop a lending policy suitable for the agricultural sector. There have also been constraints in the rural financial environment. Such as, the weak flow of information between farmers and lenders on the opportunities available, and the high risks inherent in agricultural lending".
In his response to the low participation of farmers to agric funds, President Olusegun Obasanjo urged 'commercial banks to please try and help some commercial farmers who are still not clear on how they would access the fund that is available. The Poultry Framers Association just yesterday (Monday) told me that not one of them, expect our own (Ota Farms), has been able to access fund from the commercial bank.
'I was rather concerned. We have said interest rate will be 8 per cent. It is not 18 per cent, it is eight per cent. And the document that anybody has to sign must be eight per cent. I will like to appeal to farmers that what we have agreed with the commercial banks is eight per cent," he added.
The Minister of Finance however regretted that 'comparably, the rate of loan disbursement by commercial banks to farmers remains a major challenge in achieving the goals of the ACSS. Many of the commercial banks are yet to make any loan approvals under the ACSS. Some of the commercial banks have not even distributed the application forms necessary for the ACSS, to all nationwide branches, which is further weakening the take-off of the scheme in different areas of the country. These drawbacks are not acceptable and should be addressed immediately".
Giving further insight into the agriculture scheme, the Minister said that 'since 2003, the ACGSF has guaranteed close to N2.5 billion of credit and in just the first 3 months of 2006, the fund guaranteed over N391 million of loans to farmers. In the 2005 budget the sum of N5 billion was provided to recapitalise the NACRDB and an additional N2 billion provided to facilitate the establishment of a micro-credit fund. In furtherance of these efforts to increase farmers' access to credit, Mr. President initiated a committee on Financing Agriculture, which has introduced a new Agricultural Credit Support Scheme (ACSS). The ACSS aims to provide a fund of N50 billion which will be used to provide increased access to affordable credit for Nigerian farmers".
Usman also noted that 'in the past five months, the sum of N46.7 billion of funds has been mobilized by the ACSS out of the intended N50 billion and the guidelines on how to access this has been widely publicized. These funds are available to farmers at a concessionary rate of 14%. There are incentives for early repayments. Borrowers who make timely repayments are granted a rebate of 6%, which is covered by the Central Bank, thus reducing the interest rate to only 8%".