Managing Director, Sterling Bank, Mr. Abubakar Suleiman has disclosed that the bank lent N55 billion to farmers in the last five years.
Speaking in an interview on the sidelines of Agricultural Summit Africa sponsored by bank in Abuja at the weekend, Suleiman said an additional N10 billion had been earmarked for lending in 2019.
“And if we find credible proposals, we are willing to do more than that. Beyond what we lend on our balance sheet, we have a lot of partners that we can work with to lend to farmers. The N10 billion is just a starting point,” he stated.
According to him, Sterling Bank launched SABEX, a platform for farmers to be able to store, sell and exchange their commodities due to a realisation that in the agricultural value chain it was a difficult experience for people at the lower end of the economic spectrum, particularly small and medium-scale enterprises, to access adequate financing for their businesses and be able to dispose their products and commodities after harvest.
“The bank thought of a solution that would make it possible for the average farmer to be able to access finance for their agricultural activities and at the same time be able to harvest their crops, move to a storage facility, without much losses, and be able to sell and earn value as soon as possible.
“What they have delivered is a way to decentralise commodity trading and reduce intermediation in trade, while distributing profits more widely across the value chain.
“The platform will be able to tokenise commodities and cash so that the two can be exchanged instantly irrespective of where the farmer is located.
“Once both parties have agreed on the price, they can transact on any commodity. The platform will settle the payment and the money will get into the wallet within a few minutes as opposed to the existing arrangement where commodity traders will have to wait for days or even weeks before getting their commodities sold.
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“If people do not want to sell the commodities they have harvested immediately, then they can use the commodities they have stored in warehouses as collateral for loans.
“The whole loan process will take a few minutes. These are loans that are usually in days or in weeks.”
Suleiman explained that the objective of the initiative was to drive farmers to produce high-quality commodities and be able to move these commodities to warehouses across the country without any fear of losing so much, in terms of the absence of storage facilities and post-harvest losses always suffered by farmers.
While agreeing that debt recovery was a serious problem for the banking industry, he disclosed, however, that the situation was improving.
“What we have witnessed has been improvements over the years, because of the solid governance structures we have in place.
“In the first year, the Anchor Borrowers Scheme was introduced, the repayment of the loans by farmers was pretty low. Every year after that, we have seen significant improvements.
“If the bank wants farmers to be able to pay back loans taken, it is important for the bank to have a presence in their immediate communities for effective monitoring and coordination of the repayment plan.
“Lending to farmers and not being around to provide support services when they need it, and to collect monies when they are due, cannot be an effective way to lend to anybody. That is why I spoke about effective governance structures.
“Our bank has agents across the country, particularly in the farming communities where we provide financing. This is very important to our overall lending strategy. These agents assist us to monitor the loans and recover them when they are due for repayment by the farmers.
“The farmers we deal with have also realised that it is better to pay because if they do, they will continue to access funds to from us to sustain their businesses.
“So, we believe that the repayment of loans by our farmers has improved significantly. I hope it will continue to get better,” he explained.
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