SOURCES OF AGRICULTURAL FINANCE IN NIGERIA
Finance for Agric business can be sourced from different places such as personal savings, family and friends but this is not enough as sometimes you may not even get any from this source.
However some financial institutions in Nigeria now provide funds for agriculture ventures. The following are the sources of Agric finance:
- Commercial Banks
- Microfinance Banks
- Bank of Agriculture
- Bank of Industry
Commercial Banks have been known to be very discrete and bureaucratic in the approval and disbursement of loan most especially Agribusiness loans. They see Agribusiness as a very risky business as a result they don’t believe in its viability except if it has been in existence for some years.
However, some commercial banks now have special package for SME’s as they now see the need to improve and boost the nation’s economy through them. Agriculture and Agribusiness are categorised under the SME package.
The customers of SME package enjoy great benefits one of which includes loans. Some of the banks are:
United Bank of Africa
First Bank of Nigeria
Access Bank Plc
First Bank of Nigeria
The following are the Microfinance Banks that provides finance for Agribusiness:
BOWEN Microfinance Bank
ACCION Microfinance Bank, etc.
These microfinance banks have different loan plans, repayment structure and interest rate.
Cooperatives are a wonderful source of funds for any business either small or big. This is because they operate a pool of funds from members contribution which may be daily, weekly or monthly. It is safe, reliable; it comes with low interest rate, flexible repayment plan and tenure.
Locate any multipurpose cooperative society today and begin to enjoy access to funds.
BANK OF AGRICULTURE (BOA)
It is owned by the Federal Government of Nigeria while their activity is managed by the Central Bank of Nigeria.
The bank offers different types of loan to practicing farmer. The bank from its name is basically for people engaging in Agribusiness.
Account opening is very easy, you can operate a savings (individual) or corporate account (organisation).
They offer Micro Credit and Macro credit funds to people, with no collateral from N250,000 to N1,000,000.
Interest rate is as low as 12%.
Repayment tenure is 1year with 3 months moratorium.
You are eligible to apply for loan after one month of operating the account.
Your site will be inspected and you will be interviewed before final disbursement of loan.
BANK OF INDUSTRY (BOI)
The Bank of Industry was established by the Federal Government of Nigeria to support industrialization that cuts across different sectors to provide special funding for startups and established firms.
Bank of Industry offers various loan funding package for Nigerian entrepreneurs depending on the sector their business falls into.
These are the following loan funding windows from Bank of industry.
- AGRO-PROCESSING GROUP
- BOI – DANGOTE FUND
- BOTTOM OF THE PYRAMID
- CAP FUND
- CASSAVA BREAD FUND
- COTTAGE FUND
- FGN SPECIAL INTERVENTION FUND
- STATE MATCHING FUND
Visit their website at www.boi.ng for more details.
Obtaining loans for Agribusiness is easier now than as ever been, just identify the one that suits you and your business. While planning on the loan you want to obtain from any of these sources you must put your repayment plan and capability first, this is to ensure that you don’t get indebted to these financial institutions and as a result end your dream.
- Funding: Your agribusiness can be funded from personal savings, family/friends or loans
- Low interest rates: Agricultural loans have the lowest interest rates; as low as 12%
- Specialized Loan: Loans and funds available with the support of the government to promote agriculture