A PAPER PRESENTATION ON FINANCIAL SERVICES TO PROMOTE MECHANIZATION - - PowerPoint PPT Presentation

A PAPER PRESENTATION ON FINANCIAL SERVICES TO PROMOTE MECHANIZATION BY BANK OF AGRICULTURE (BOA)

May 4, 2016 1

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OUTLINE OF PRESENTATION

• INTRODUCTION
• FINANCIAL SERVICES OF BOA
• BOA/FEDERAL MINISTRY OF AGRICULTURE AND

RURAL DEVT PATNERSHIP ON IMPLEMENTATION OF AGRICULTURAL TRANSFORMATION AGENDA PRIVATE SECTOR DRIVEN MECHANIZATION INTERVENTION PROGRAMME

• MECHANIZATION INITIATIVE OF BOA
• CHECKLIST OF REQUIREMENTS FOR ACCESSING

AGRIBUSINESS FACILITIES FROM BOA

• CONCLUSION

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INTRODUCTION Bank of Agriculture in Perspective Bank of Agriculture (BOA) Limited was incorporated as Nigerian Agricultural Bank (NAB) in 1972 and became operational in

• 1973. In 1978, the istitutio’s name was

changed to Nigerian Agricultural and Co-

• perative Bank (NACB) Limited to reflect a

broader mandate. In October 2000, following the Federal Goeret’s efforts to streamline the operations of its agencies, the NACB, Peoples’ 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 (NACRDB) Limited. Ten years later, in October 2010, the bank was rebranded and it adopted the new name Bank

• f Agriculture Limited as part of its institutional

transformation programme.

Key Mandates The Bak’s key adates are:

• Provision of agricultural credit to support all agricultural

value chain activities.

• Provision of non-agricultural micro credit.
• Savings mobilization.
• Capacity development through promotion of co-
• peratives, agricultural information systems, and the

provision of technical support and extension services.

• Provision of opportunities for self-employment in the

rural areas, thereby reducing rural-urban migration.

• Inculcation of banking habits at the grass-roots of the

Nigerian society.

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Strengths

• Nigeria’s largest deelopet fiae istitutio ad leadig agriultural fiae

institution.

• DFI with the highest rural operational coverage nationwide, with 110 outlets

nationwide, 6 Zonal Offices and a Head Office.

• Highest interaction/interface with rural farmers with deep institutional

knowledge of rural and agricultural finance.

• Over 40 years experience in rural and agricultural finance.
• Strategic partnerships with USAID MARKETS, IFAD, World Bank, RUFIN and

ECOWAS Funds, Federal Ministry of Agriculture & Rural Development, Federal Ministry of Women Affairs, State, Local Governments and other stakeholders in agriculture.

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FINANCIAL SERVICES The financial services of the bank are classified into credit delivery services and savings mobilization services. CREDIT DELIVERY SERVICES Direct Credit Products Micro – Credit Developed for financing both agricultural and non-agricultural activities with a maximum loan volume of N250,000.00 Small and medium scale Loans Developed to finance agricultural and agro-allied activities with loan volumes ranging from above N250,000 – maximum of N50 million.

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Financial services cont’d. Agribusiness Loans Developed to finance agricultural and agro-allied activities with loan volumes ranging from above N50 million – a maximum of N2 billion single obligor. Marketing loans for Agricultural Commodities In order to ensure prompt repayment of loans taken by the large scale crop farmers, the Bank introduced the commodity marketing loans. It cuts across the micro-credit, SME and Agribusiness loans. On-lending Credit Product This is a lending strategy through which the Bank partners with States, Local Governments, Agricultural Financing Agencies, NGOs, Community Based Organisation etc. to reach larger segment of Nigerians especially the under- privileged and rural poor with micro-credit for enterprise development

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Financial services cont’d. Collaboration This involves the establishment of formal relationship with a third party for the purpose of implementing agricultural credit projects jointly. It is another strategy through hih the Bak reahes lietele at the grassroots. “oe of the Bak’s collaborating partners are: Federal, States and Local Government Agencies, NGOs, Micro-Finance Banks, Micro-finance Institutions, Financial Co-operatives etc. Credit Products For Nigeria Youths And Women The Bank in its efforts to expand its financial inclusion activities introduced two credit products viz: Youths Agricultural Revolution in Nigeria (YARN) for Youths and Grow and Earn More (GEM) for Women. YARN – Developed to encourage Nigerian Youths to key into agriculture and take it as an investment or as a business. It has the following features:

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Financial services cont’d. It has the following features:

• The maximum loan limit under this product is N1 million per beneficiary.
• The beneficiaries must be small holders as defined under the Nigeria

Incentive Risk Sharing for Agricultural Lending (NIRSAL) guidelines.

• To facilitate unhindered access by these target groups, the beneficiaries

need not have collaterals but must provide acceptable guarantors.

• The loans are accessible by individuals or groups. The individuals in the

group can get N1 million each subject to technical determination of scope and financial requirements of the project.

• The loans can be access by individuals and groups in line with NIRSAL

Credit Risk Guarantee (CRG) and Interest Draw Back Program (IDP).

• Loan period, Grace or Moratorium on the products will be determined

based on the project type.

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Financial services cont’d. GEM – Developed to encourage Nigerian women to key into agriculture and take it as a business. It has the following features:

• The maximum loan limit under these products is N1 million per beneficiary

subject to technical determination of the scope and the input requirements.

• The beneficiaries must be small holders with the required land for cultivation
• r any of the value chain products.

To facilitate unhindered access by these target groups, the beneficiaries need not have collaterals. In lieu of this, there will be collateral substitutes such as adequate and acceptable guarantors with variable income, NIRSAL Credit Risk Guarantee to cover 75% of the loans accessible by individuals or groups. The individuals in the group can get N1million each subject to technical determination and financial requirement of the project.

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Financial services cont’d.

• Loans period grace or moratorium on the products will be determined based on

the project type and the gestation period of the project. SAVINGS MOBILIZATION SERVICES The savings product of the bank at the moment include but not limited to the following:

• Lien Savings Account
• Farmers Savings Account
• Salary Savings Account
• Liberty Savings Account (LISA)
• Meso Savings Account (MESA)

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BOA/FMA&RD PARTNERSHIP ON IMPLEMENTATION OF AGRICULTURAL TRANSFORMATION AGENDA, PRIVATE SECTOR DRIVEN MECHANIZATION INTERVENTION PROGRAMME The immediate past Minister of Agriculture and Rural Development, Dr. Adesina Akinwumi, as part of his efforts in achieving the Agriculture Transformation Agenda (ATA), set up an Advisory Ministerial Mechanization Committee (AMMC),

• f which BOA is a member, on 18th December, 2012 to

develop a framework on implementation of private sector driven Mechanization intervention programme. The key activities of the intervention inter-alia include the following:

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BOA/FMA&RD Partnership cont’d.

• Identification of pilot ehaizatio etres o the asis of dead ad ithi

farming communities and clusters with high potentials of benefitting from such e.g., SCPZ sites, near One Stop Agro Centres (OSAC), FADAMA related clusters and other nationally important project sites and centres.

• Selection of Agro Machinery Manufacturer Representatives with verifiable ability to

deliver tractors, implements and other required machineries within 90 days.

• Funding and placing orders
• AMMC in conjunction with BOA to structure the Agriculture Equipment Hiring

Enterprise (AEHE) in the identified locations and to advertise for Private Sector Operators acquisition through bidding.

• Delivery of machinery to locations and handover SPO (Bid winner). The agricultural

machineries recommended for the programme includes:

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BOA/FMA&RD Partnership cont’d.

• Tractors – 65HP, 75HP or 82HP of Massey Fergusson, Foton Tractors, John

Deere, Mahindra, New Holland and Tak Tractor.

• HP capacity matching implement viz disc ploughs, disc harrow, disc ridger,

tipping trailer, bio sprayer, harvesters, fertilizer sprayer, planter and trans planter.

• Harvest/post-harvest equipment
• Motorized hand tillers

Agriculture Equipment Hiring Enterprise (AEHE): Out of 80 AEHE that was proposed, 72 had been established across the nation. Refinancing Strategy: The refinancing strategy as contained in the MOU signed between the bank and the FMA&RD is as follows:

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BOA/FMA&RD Partnership cont’d.

• FMA&RD exposure 35%
• BOA loan to the Service Provider Operators (SPOs) 35%
• Equity Contribution by the SPOs 20%
• Vendors Stewardship to the Programme 10%
• Loan period 4 years
• Interest rate 7%
• Repayment arrangement:

Loan granted to the SPOs by vendors and BOA 2 years. Loan granted to the SPOs by the FMA&RD 4 years.

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MECHANIZATION INITIATIVE OF BOA BOA in its effort to support the Agricultural Transformation Agenda (ATA) of the Federal Government of Nigeria has developed series of credit products to finance agricultural activities across the entire agricultural value chain, namely; Input Supply, Production, Storage, Processing, Transportation, and Marketing. Therefore, to take care of mechanization service providers, the bank has developed a credit product named, Input Procurement Credit Facility.

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Mechanization Components To Be Financed Under The Product:

• Land Clearing Equipment: This will include but not limited to the

following: Bulldozer caterpillars, pay loader and excavators.

• Tractorization equipment: Tractors and implements, power tillers,

sprayers, planters, harvesters, threshers, etc.

• Irrigation equipment: Irrigation pumps, water pumps, irrigation

pipes/accessories. Target Borrowers Corporate bodies, co-operative societies, associations and individuals. Sources of funding

• Intervention funds from CBN.
• CBN Anchor Borrowers Programme on Agricultural Mechanization.
• Collaborations with Federal and state government.

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Loan Tenor 2 – 4 years depending on the nature of the equipment financed. Interest Rate: Single digit interest rate depending on the source of the funding. Security

• Asset debenture on equipment financed.
• Tangible collateral securities acceptable to the bank.

CHECKLIST OF REQUIRMENTS FOR ACCESSING AGRIBUSINESS LOANS FROM BOA. Potential borrowers/investors are guided by the attached checklist of requirements.

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CHECK LIST OF REQUIREMENTS FOR LENDING TO CORPORATE AGRIBUSINESS ENTITIES

S/NO. ITEMS DETAILS 1. Account Opening Opeig of a aout at ay of the BOA’s rah offie earest to you. 2. Formal Request for Loan Buy and complete BOA prescribed Loan Application Form and submit to the branch where the form was purchased. 3. Feasibility Study/Business Plan on the Proposed Project. Two copies showing clear trends and project cash flows and profit & loss for the proposed loan period. 4. Bankers Information required include:  Name of Bankers  Address of Bankers  Account numbers of all Banks  Statement of Bank Accounts for six (6) months; up to date for your establishment and the Directors.

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5. Security for the Loan (A) Acceptable securities which may be one or more of the following:  Realties, accompanied with their C of O and approved building plan.  Shares of blue chip companies.  Treasury bills.  Corporate guarantees.  Deposit with CBN.  Personal guarantees backed by any one or combination of all above.  Letter of intent to guarantee backed by tangible security (where applicable) (B)  Where Real Estates are proposed as security:  Provide 3 copies of C of O of the property(s).  Approved building plan of the property.  3 copies of colored photographs of 3 sides (side, front and back views of the property).  3 copies of registered deed of assignment/conveyance (where applicable).  Two copies of current valuation report by BOA registered Estate Surveyor and a visit by BOA Branch/Zonal office nearest to the project location.  Copies of Share Certificates if proposed as security.  Copies of any other document, if proposed as security.

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6. Current Tax Certificate of Company and key Directors for the last 3 years/ Two copies each. 7. Recent passport sized photographs of the Managing Director/Chief Executive of the company. Two copies. 8. Evidence of leasehold of Business premises or

• wnership, if any.

Two copies. 9. Certificate of Incorporation Two copies. 10. Board resolution authorizing the company to borrow from BOA. Resolution must state the amount being requested. 11. Detailed C.V of all top Management Staff and Directors of the company. Detailed CV of the farm manager with relevant qualifications. One copy each. 12. Audited Financial statements for the last three to five years. Two copies of immediate past 3 – 5 years audited financial statements. Notes to the accounts should be detailed. 13. Forms CAC 2 and CAC 7 Two (2) copies each.

May 4, 2016 22 14. Memorandum & Articles of Association (MEMART) Document should show:  Power to borrow  That Paid-Up Capital is at least 25% of the Loan applied for.  Evidence of any increase in Paid Up or authorized share capital must be submitted (if applicable).  Clause must include agricultural business. 15. Evidence of filing of annual returns. 16. Names ad signatures of persons authorized to deal with the Bank in respect of the loan application. 17. Iteratioal Passport/Drier’s License/National Identity Card of Chairman and Directors. 18. Bank Statements of the company and Chief Promoter for the last one year. One copy each.

Conclusion

• To initiate credit process with the bank, potential

borrowers/investors should visit the BOA branch office closest to their area of operation.

• Interact with the branch officials and obtain a checklist of
• requirements. The essence of this is to acquaint them with the
• perations of the bank and various facilities available.

Thank you for the attention. Bank of Agriculture (BOA) May, 2016.

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