Nigerian president Umaru Musa Yar’Adua has approved that the construction of a NGN 200 billion (USD 1.35 billion) agricultural fund to be disbursed to commercial farmers in Kano at an interest rate of nine percent through commercial banks. The Central Bank of Nigeria (CBN) is responsible for overseeing and creating guidelines for the distribution of the fund. For more on the CBN, please read this MicroCapital article. CBN will also collaborate with the Federal Ministry of Agriculture and Water Resources to monitor the fund’s implementation.

The agricultural fund’s approval was disclosed by Mr. Tunde Lemo the Deputy Governor of Financial Sector Surveillance at the CBN at a one-day investors’ forum at the Royal Tropicana Hotel in Kano. At the forum, Mr. Lemo expanded on the government’s hopes for the fund, announcing that enterprises to be covered under the initiative will include the cultivation of crops, livestock, agro-allied industries that process crops, livestock, fruits, vegetables, the conversion of primary outputs from the farm into semi-finished or finished products, and the marketing and exportation of agricultural products. For more information on Nigeria’s attempts to expand its agricultural industry through microfinance, read this article.

Mr. Lemo added that the CBN was ready to provide the technical support and capacity building for stakeholders, but he addressed the need for more microfinance in the area. By establishing more banks in rural areas across the state, the benefits of the fund can be distributed to all people. He charged the Kano State government to set up the appropriate machinery and mechanisms for this objective. For more on microfinance in Nigeria, please read this MicroCapital article.

In response, Kano State Governor, Malam Ibrahim Shekarau, said the state government is mindful of the need to provide one per cent of its annual budget to support microfinance activities as required in the Microfinance Policy and Regulatory Guidelines and “would work with the CBN on the best way to channel these funds to the people of the state.” Mr. Shekarau’s 2009 budget includes NGN 500 million set aside for microfinance activities. For more on Nigerian state contributions to microfinance activities, please read this article.

By: Andrea Chu

ADDITIONAL RESOURCES

LeadershipNigeria, March 20, 2009: “Yar’Adua Approves N200bn Agric Fund”

MicroCapital Story, November 13, 2008: “Central Bank of Nigeria (CBN) Declares that New Microfinance Bank Licenses Will Only Be Granted to Those Operating in Rural Areas”

MicroCapital Story, November 3, 2008: “Only 12 of 36 Nigerian States Contribute to Microfinance Activities for a Total of $1.26m”

MicroCapital Story, October 30, 2008: “Central Bank of Nigeria Grants 815 New Microfinance Licenses“