118_Nigeria Agricultural Cooperative and Rural Development Bank

THE BANK OF AGRICULTURE: CAN KABIRU MOHAMMED ADAMU DELIVER?

By Emmanuel Ado  

Only time will tell,if President Muhammadu Buhari,handed Kabiru Mohammed Adamu,a poisoned chalice or not,with his appointment as the Group Managing Director/CEO of the Bank of Agriculture(BOA)? Adamu comes with an impressive credentials to lead the bank. His credentials are not the problem.The problem is that he needs the wholehearted support of the President to reposition the bank.If the president gives him that necessary support,then the ball will be in the court of Kabiru Mohammed Adams. So in a sense, Adamu’s success unfortunately doesn’t lie in his hands,but if he fails,he will be left to carry the can all alone,after all failure is an orphan.

For a president that is desirous of diversifying the Nigerian economy,that must do all in his power to conserve scarce foreign exchange spent on importing food – from ríce to vegetable oil,it is in his enlightened self interest to help the BOA succeed. And the critical ingredient that BOA needs is funding,especially as a world class management team has been put in place. Once funding has been addressed ,then we can begin to talk of a new way of doing business,commitment,and the attitude of Nigerians to loans repayment etc.

The Nigerian economy has been hit hard,real hard by the fall in oil prices,which has consequently affected foreign exchange earnings,which like Fela will say is “double wahala”,considering the huge import bill for food. And like previous governments,the Buhari administration has come up with Economy Recovery and Growth Plan(ERGP), to diversify the economy. The key priorities include ensuring food security,through agro- related manufacturing.Now is the time for President Muhammadu Buhari to match words,with action.The challenge to increase non – oil revenue and to stop importation of food is an emergency and should be so treated.

The greatest challenge confronting the Bank of Agriculture is lack of loanable funds to farmers.And this is because the Central Bank of Nigeria(CBN). and the Federal Ministry of Finance have refused to inject further funds into the bank.The CBN and Federal Ministry of Finance argument,is that they can’t “continue to pump in fresh funds,without calling the shot”, said a CBN source. The two “money agencies” are angry that the Federal Ministry of Agriculture and Rural Development that controls the BOA has no dime in equity contribution,but it supervises the bank – appoints the management and board.Had the agriculture ministry ran the bank successfully,these issues wouldn’t be raised. But the tragedy is that it had always ran the bank aground. So far Audu Ogbeh,the present Minister seems be different from the other ministers. The fundamental problem,which moving forward President Buhari must frontally address are the funding and supervision of the BOA. If these two issues are not addressed,the CBN and Federal Ministry of Finance will never open the tap,so long as the Federal Ministry of Agriculture continues to run the BOA,so long will the Bank continue to suffer from lack of funds.

The Federal Government of Nigeria wholly owns the bank,that has an Authorized Share Capital, with 40% shares held by Central Bank of Nigeria (CBN) and 69% shares held by the Federal Ministry of Finance Incorporated (MOFI).But It is supervised by Federal Ministry of Agriculture,that owns no stake in the bank..To date the CBN and the Federal Ministry of Finance have only paid N4 billion and N27 billion on their respective stakes in the bank,leaving the CBN with a balance of N15.9 billion and Federal Ministry of Finance, N2.2 billion to pay up.

The House of Representatives,that indulges itself with endless public hearings wants to investigate the refusal or is it the failure of the CBN and Federal Ministry of Finance to pay up their share capital.The motion by Rep. Femi Fayeke shows the lack of capacity of our legislators. Interactions with key stakeholders would have revealed that the problem is that of control and supervision and the legislative action required.In this case an amendment to the law setting up the BOA,to give the Federal Ministry of Finance the “comfort” – supervisory rights over the bank that they desire. My question for the House of Representatives is ,what is there to investigate?

Successive management of BOA had wasted valuable man hours trying to get CBN and Federal Ministry to release money to the bank I hope Adamu will not go that same way.The CBN and the Finance ministry will continue to dribble him or grudgely give him something that will show a semblance of activity. Adamu is definitely caught between the devil and the deep blue sea,as he can’t be seen moving against his employers – the federal ministry of agriculture, who strictly speaking are the reason why he is in problem.

To reposition the bank,Adamu must think outside the box.The CBN and the Federal Ministry of Finance are not the only problem confronting the bank,that has had a chequered history.Some previous management were more like buccaneers,whose sole mission was the liquidation of the bank.He must lead by example. The losses recorded in 2014 and 2015 that have been put at N2.2 billion and N4.8 billion respectively calls for blockage of the system that has allowed that kind of loss. Good to know,he has set machinery in motion to review loan processes to plug gaps or at least stem the growth of bad loans. The Standing Product Committee,that will review all the products and their performance,and if need be’ redesigning them in line with the present reality is smart.

He must tackle the portfolio farmers who are largely responsible for the non – performing loans that has brought the bank to its knees,If Adamu recovers the outstanding loans running into billions he can call the bluff of the CBN and the Federal Ministry of Finance.Previous management had vowed to act in line with the directive of the CBN to “publish details of customers whose accounts are not performing, the publication will include the names of persons, entities, directors, subsidiaries, and key sponsors of various categories of accounts, and will be forwarded to all banking regulators including the CBN, professional bodies, embassies in Nigeria, security and other agencies as would be required”, but they did absolutely nothing.The reason they couldn’t,is because they are the High and mighty in Nigeria.

In spite of the challenges confronting the bank,it has fashioned out collaborative schemes with federal,state governments,Micro- Finance Institutions etc. Necessity as they say, is the mother of invention.Worthy of note is the fact,that BOA is the main driver of the CBN Anchor Borrowers Programme. The joint venture – CBN/BOA,in which the CBN uses the branch network and experience of BOA to reach farmers,shows confidence and capacity of the BOA,to deliver.And confirms the saying,that there is no permanent enemy in life,except interest.Which is why the Minister of Agriculture must be sensitive to the position of the CBN and Federal Ministry of Finance. Ogbeh must “resist that temptation” to force the CBN into surrendering to BOA the various CBN Anchor Programmes.This will be the final blow,that will send the bank to its untimely death,as the CBN will quietly stop the flow of funds.

The various initiatives of the CBN – designed to create jobs,reduce food importation and diversify the economy,would no doubt have remained a mirage without the BOA.This the CBN knows from its experience with commercial banks that have continuously messed it up after collecting “cheap” funds,which they never lent to farmers,but diverted to trading,their stock in trade.

The key mandate of BOA;Provision of credit to support all activities in the Agricultural Value Chain, Provision of non-agricultural micro credit to the poor segment of the society comprising rural artisans, petty traders etc.,Capacity development for the promotion of co-operatives and agricultural information systems,Provision of technical support and extension services, Boosting of opportunities for self-employment in the rural areas to stem rural-urban migration and the Inculcation of banking habits at the grass-roots of Nigerian society,makes it imperative that the Buhari administration resolves the problem confronting it. The BOA might have had a difficult past,but the future looks promising.

 

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