FG Sells 40% Shares Of Bank Of Agriculture To farmers

Chief Audu Ogbeh

The Federal Government has finally privatised the Bank of Agriculture (BOA) with individual farmers, farmers cooperatives expected to own 40% of the shares of the bank while other government ministries such as finance and agriculture, Central Bank of Nigeria will own 10% shares each.

The private sector will own the remaining 20% in the new bank.

Speaking on Tuesday during a joint press briefing in Abuja to officially announce the decision, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, said the bank would be restructured and recapitalised to pave way for private ownership in order to deliver better services to farmers in the country.

He said the bank would raise between N200 and N250 billion in the next few months, after the bank debt profile must have been taken over by anchor insurance.

Chief Ogbeh who said though his job would end on May 29, 2019, assured Nigerians that whoever succeeds him as a minister would drive the process to conclusion.

“It’s imperative to restructure the bank to substantially improve its operating framework, and governing framework to improve its efficiency.

“Accordingly, the federal government through the National Council on privatisation and the secretariat the Bureau of Public Enterprises with the support of Ministry of Agriculture and Rural Development developed a new strategy to reform and restructure the bank .

“This new strategy will see BOA transform into a truly agriculture and finance bank modelled along the lines of Agriculture Bank of China and Rhabo Bank of Netherlands with functional branches in all the local government areas and major towns in Nigeria. 

“In other to facilitate guarantee repayment and achieve noticeable  impact on farming and agriculture. Farmers will be encouraged to form cluster of cooperatives and societies for the purpose of participating in the ownership of the banks. Essentially this will be a farmers’ bank.

“In term of shareholding, the federal govt will retain only a minority equity stake of 40% while farmers cooperatives and the private sector will acquire a substantial and controlling stake .

“This we believe will inculcate a more disciplined culture in loan repayment  and credit performance and  also instill  responsible behaviour in honouring credit commitment .

“We notice that farmers borrow from BOA with some form of entitlement mentality and believing  this is just part of the national cake and not due for repayment.

“We believe that a structured boa will prevent this kind of attitude from running down the bank. We also expect that the non performing credit facilities  will be taking off the balance sheet and could be sold off to a factor agent,” he said

He further said the bank needed to be recapitalise to ensure that there were no existing liabilities on the balance sheet of the bank.

“This we believe will mark it attractive to the private sector investors and also give the bank a clean slate from which it can grow its operations,” he said.

Earlier, the Director General of the Bureau for Public Enterprises (BPE), Mr Alex Okoh, said the aim of commercializing and privatising the bank was to strengthen the bank to make it more effective like the farmers banks in China and Holland with over 800 million shareholders. 

He stated that years of under-funding the bank and the nonperforming loans crippled the effectiveness of the bank to deliver tailored services to farmers.

Mr Okoh particularly said the potential of the bank of Agriculture did not perform optimally because of historical loses, lack of a robust monetary framework, and poor risk management strategy, thereby missing out on their opportunities.

According to him, “This process is going to lead essentially to the privitasation of the equity of Bank of Agriculture, the financial adviser will come up with the final structure after the whole process is completed. 

“The government agencies equity in the new back with be a minority or 40%, then we will then invite private sector investors who will own 20%, then farmers and farmers cooperative will have a preponderant of 40%, making it private sector bank. Because in the future the bank will be listed on the stock market, so that the bank can then subscribe to the strict corporate governance rules and regulation of a private manage and oversight institution.

“The N250billion the minister mentioned is just an estimate, we need to find out the size of the negative equity that exist in the bank of Agriculture, before we know how much to bring it to per and then see possible recapitalisation.

He said the bank would engage in road show across the geopolitical zones to enable farmers invest in the bank. 

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