Barely few weeks after NERFUND, a government agency, revealed it may shut down operations due to unpaid loans, the Bank of Agriculture, has indicated that it could soon be following the sane route.
According to findings by National Daily, the Bank of Agriculture is being weighed down by N37 billion in unpaid loans to Micro, Small and Medium Enterprises as well as large companies.
The MD of the bank, Kabir Mohammed Adamu disclosed this while receiving members of the Senate committee on agriculture. He said the current loan portfolio of the company stands at N47, 212, 810,345.05 to MSMES and large scale both on agricultural and non-agricultural beneficiaries out of which the sum of N10, 760,960.90 has been repaid while N37,449,480,101.02 is still in default.
National Daily gathered that the challenges being faced by the BOA and NERFUND show government should not be in the business of lending money.
The bank may not have applied thorough risk management processes when it gave out the loans. Why did the bank continue to give loans when a huge proportion of them went unpaid? Government would be better off if it focused on creating a conducive environment for businesses, which would help bring down the cost of borrowing.
Bank of Agriculture Limited was incorporated in 1972 as Nigerian Agricultural Bank (NAB), in 1978, the name was changed to Nigerian Agricultural and Co-operative Bank Limited (NACB) to reflect the inclusion of co-operative financing into its broader mandate.In October, 2001, three institutions Nigerian Agricultural and Co-operative Bank Limited (NACB), People’s Bank of Nigeria (PBN) and the risk assets of the Family Economic Advancement Programme (FEAP) were merged to form Nigerian Agricultural, Co-operative & Rural Development Bank Limited.
In October 2010, following the rebranding of the Bank to reflect its institutional transformation Programme, the Bank adopted the new name Bank of Agriculture Limited (BOA). The bank is 40% owned by the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance which has a 60% stake.