Farmers’ Loan Proposals Rejected By Banks

It has been revealed that Micro-finance banks (MFBs) operating in the country are rejecting loan proposals from farmers due to cash crunch.

However, some operators claim the banks do not have enough cash to lend to the farmers.

Speaking on this, the Chairman, National Association of Microfinance Banks (NAMBs), Southwest, Mr Olufemi Babajide, said many farmers who opened accounts were finding it difficult to access credit.

He said some farmers opened accounts with N100, adding that the system has been made flexible for the growth of the farmers and virtually all the banks are afraid of taking the risk of lending to farmers because they are not sure of when CBN will release NIRSAL funds.

“Many of the banks are not liquid, and therefore, not ready to advance credit to a sector where they are not sure of recouping their money immediately. The idea runs contrary to the provisions of the NIRSAL,” said Babajide.

He added that: “Under NIRSAL, microfinance banks are expected to contribute 15 per cent, farmers (10 per cent) while NIRSAL provides the balance. The total would be handed over to the banks for lending to farmers.

“The agreement stipulates that each farmer will get 10 times whatever they have in their accounts with the banks. If, for instance, a farmer opens an account with N10,000, he is expected to get N100,000 as loan. Though CBN has promised to release the N75billion for lending to the farmers, the money is not forthcoming.

“The banks do not want to sound stupid. CBN told the MFB operators to lend to the farmers, while promising to pay them back from NIRSAL fund. Do you think a bank that is battling will take that risk and still continue in business, no, it is not possible.”

Similarly, the Managing Director, Best Foods Limited, Mr Emmanuel Ijiwere said agricultural sector has suffered a lot in the hands of the banks and the level of credit to the sector is less than 1 per cent, arguing that the issue is having a telling effect on the sector.

He said farmers have been trying to access credit for operations, but in most cases have their proposals rejected by the banks.