The Bank of Agriculture (BOA) is undertaking a total business overhaul that will see it improve its operations to such a level where it will be rated the leading Development Finance Institution (DFI) in Africa. This constitutes the summation of the resolutions adopted by the Management of the BOA at its strategic planning retreat held in Kano from November 11-12, 2011. The revalidation of this vision by the Bank’s Senior Management followed a vigorous appraisal of its business, the Nigerian business environment, the challenges of agriculture financing and the internal challenges that hinder prime performance by the BOA.
Speaking to participants on the challenges facing the Bank during the retreat, the BOA Managing Director/CEO, Dr. Mohammed Santuraki noted that the BOA is an institution of strategic importance to the national economy. He observed that the Bank operates in a sector that contributes over 40 percent of the national GDP and employs not less than 70% of the nation’s workforce. He however, observed that BOA has suffered progressive decline in the last 20 years due to both internal challenges and the natural neglect of agricultural sector due to the increasing dependence on oil as the nation’s source of income.
Santuraki however, noted that this “natural resources trap” that results in the neglect of other sectors by countries with natural resources such as oil is not peculiar to Nigeria, but prevalent among natural-resources-rich developing nations. He expressed optimism that under President Jonathan’s Transformation Agenda, supported by Minister of Agriculture’s Agricultural Transformation Agenda, and Central Bank of Nigeria’s NIRSAL project things are about to change for good in the sector.
The BOA MD/CEO said that the Bank under the current leadership supports all the Government’s efforts in transforming agriculture. He noted that Government needs to reform its subsidies in the sector to ensure that it is sustainable and reaches the target beneficiaries. Apart from fertilizer subsidies, he gave example of interest rate subsidies. Dr. Santuraki observed that a situation where government imposes a subsidized interest rate on the Bank’s loans without a corresponding subsidy support, naturally erodes the capital available for the Bank’s business operations. This he noted poses significant challenges to sustainability.
He however, reiterated the firm resolve of the present Management to review the Bank’s operating model towards ensuring its sustainability, emphasizing that “no organization is set up to make losses.”
The BOA Managing Director remarked that the Bank has some inherent strengths which could be leveraged to broaden and deepen its operations and impact. This includes the Bank’s unrivaled reach which gives it capacity to offer credit and savings services, and also non-funding support to agricultural and rural enterprises to promote financial inclusion.
Dr. Santuraki informed that the Management is already in the process of transforming the Bank. He said the process of achieving its Three Direction Points of modernization, refocusing and capacity-building is progressing in line with his declaration when he assumed office last year.
M. N. Kolo
Head, Corporate Planning Dept.