Functions of Bank of Agriculture in Nigeria.

The basic and foremost of all the functions of Bank of Agriculture in Nigeria is to stimulate agriculture, improve lives and grow communities. As Nigeria’s largest development financial institution and leading agricultural financial institution, it has the highest rural operational coverage nationwide with over 201 outlets, 6 zonal offices and a head office in Nigeria.

The Bank of Agriculture ever since its operations in the country is recorded to have made the highest interaction/interface with rural farmers and it is constantly feeding them with deep institutional knowledge of rural and agricultural finance. So far, this development financial institution has garnered rich experience in rural and agricultural finance for over 40 years.

It has reputably established and sustained strategic partnerships with USAID markets, IFAD, World Banks, RUFIN, ECOWAS funds, Federal Ministry of Agriculture and Rural Development, Federal Ministry of Women Affairs, State and Local Governments, etc. Without mincing words, the financial company is an elephant to reckon with when it comes to the industry of the Nigerian agriculture.

The History of the Bank of Agriculture

The Bank of Agriculture was incorporated as Nigerian Agricultural Bank in 1972 and first became operational in 1973. The name of the institution was changed to Nigerian Agricultural and Co-operative Bank in 1978 with an aim to reflect a broader mandate.

Then in October, 2001, following the Federal Government’s efforts to streamline the operations of its agencies, the NACB, People’s Bank of Nigeria and the risk assets of the Family Economic Advancement Programme were merged to form Nigerian Agricultural, Co-operative  Rural Development Bank.

Ten years later, in October 2010, the bank was rebranded and it adopted the new name Bank of Agriculture, that is BOA, Limited as part of its Institutional Transformation Programme in 2010. Although, prior to the merger, all three entities engaged in micro-financing of small agricultural enterprises and schools of agriculture, it was the government who merged the activities of NACB, PBN, and FEAP to eventually form the BOA.

The bank is a Nigerian government sponsored bank that provides credit facilities to both small and large scale farmers and small businesses within rural areas. The current Managing Director/CEO Bank of Agriculture Limited is Alwan Ali Hassan.

Some of the Things Bank of Agriculture Do

The functions of Bank of Agriculture in Nigeria are not more than these below:

  • To provide agricultural credit to support all agricultural value chain activities
  • To provide non-agricultural micro credit
  • Savings mobilization
  • To develop capacity through promotion of co-operatives, agricultural information systems, and the provision of technical support and extension services
  • To provide opportunities for self-employment in the rural areas, thereby reducing rural-urban migration
  • To inculcate banking habits at the grass-roots of the Nigerian society

Functions of Bank of Agriculture in Nigeria.

Since the basic functions of BOA is to provide financial aid to struggling farmers and individuals whose interest in the agriculture industry of the country is strong, this article has brought to you the several available credit products through which the Bank of Agriculture transform the society. Here are Bank of Agriculture loan services:

1. Direct Credit Product

The bank’s direct credit product includes:

  1. Developed to finance agricultural productions and Agro-allied activities.
  2. Loan volume ranges from above N250,000.00 to a maximum of N50,000,000.00.
  3. Limit of N5,000,000.00 to individual persons.
  4. Above N5,000,000.00 to corporate organizations.
  5. Loan tenor not exceeding 5 years.
  6. Disbursement both cash and kind.
  7. For both individuals and cooperate bodies.
  8. Staggered disbursement .
  9. Backed up with viable, profitable and bankable business proposal.
  10. Agro-business must be a clause in the memart (the memorandum and articles of association) of the company for corporate applicants.
  11. Security acceptable to BOA requirement
  12. Interest rate 14% for agricultural production and Agro-processing while commodity marketing is 20%.
  13. Current tax clearance certificate required.
  14. Last 3 years audited statement of account or statement of affairs required.
  15. Consent to mortgage of the landed property being pledged as security for the loan required.
2. Large Credit Product

The bank’s large credit product includes:

  1. Developed to finance large agricultural production and Agro allied activities.
  2. Loan volume ranging from above 50 million to a maximum of 1 billion for a single obligor.
  3. Accessed by corporate bodies only.
  4. Loan tenor not exceeding 5 years
  5. Disbursement both cash and kind.
  6. Staggered disbursement.
  7. Backed up with viable, profitable and bankable business proposal.
  8. Agro-business must be a clause in the memart of the company for corporate applicants.
  9. Security acceptable to BOA requirement.
  10. Interest rate 14% for agricultural production and Agro-processing while marketing is 20%.
  11. Current tax clearance certificate required.
  12. Last 3 years audited statement of account or statement of affairs required.
  13. Consent to mortgage of the landed property being pledged as security for the loan required.
3. Cooperative Family Feeding Programme

This product was developed to make agricultural produce readily accessible to all at competitive prices while ensuring strict adherence to international standards, certifications and regulations applicable to food processing.
This product program is part of the plan to ensure consumption of locally produced food stuffs in line with the Federal Government’s resolve to encourage the conservation of scarce foreign exchange presently deployed to the importation of food commodities, while at the same time creating valuable jobs in the agricultural sector.

The CFFP envisages the direct supply of foodstuff to families through registered Cooperatives that meet the qualifying criteria in order to reduce the prices, taking advantage of economies of large scale supplies. In addition, it will provide credit facilities to enable Cooperative members’ access foodstuff for ninety (90) days with only a 40% down payment and the direct sourcing of food stuffs from local primary producers and processors. This would assure quality and reduce incidences of contamination arising from poor handling. With food issue settled on the home front, it is expected that productivity of beneficiaries would improve even at work, while their overall well-being is expected to also improve. The target customers are as follows;

  1. Corporate organizations or co-operatives that are able to guarantee a minimum of 1,0000 staff/members capable of paying back N40,000.00 – N60,000.00 over 3 months (quarterly) from their salaries or income at a ratio of 40% (Month 1): 30% (Month 2): 30% (Month 3).
  2. Independent working class with an income of not less than N50,000 Monthly willing to register with recognized cooperative bodies (e.g. Abuja Cooperative Financing Agency and Lagos State Cooperative Federation)
  3. Existing registered members of these cooperative bodies (Abuja Cooperative Financing Agency and Lagos State Cooperative Federation)
4. Equipment Leasing Product

Another product that enhances the functions of Bank of Agriculture in Nigeria is the equipment leasing product. This product will contribute to the success in agricultural business and also impact on economic and job growth. The minimum documentation requirement for the target beneficiaries, however, additional documents may be required as the need arises based on the transaction in focus:

  1. Formal application letter requesting for the facility from qualifying Lessees.
  2. Certificate of registration/incorporation from Lessee’s firm.
  3. Regulatory Certificates for regulated products from relevant regulatory agencies like NAFDAC and SON Certifications.
  4. The Article and Memorandum of Association of the Lessee.
  5. Credit Proposal Memorandum.
  6. Commitment/ Offer Letter.
  7. Executed Lease Agreement.
  8. The Sale Agreement.
  9. Purchase Agreement.
  10. Lessee’s unqualified audited accounts for 3-5 years immediately preceding the application.
  11. Six months or more bank statements of the lessee immediately preceding the request letter.
  12. Financial Projection of the Lessee during the lease period.
  13. Profile of the Board of Directors and Management Team of Lessee.
  14. Description of the business of the Lessee, including but not limited to information on market share, sources of raw materials and other inputs, manufacturing processes and operating cycle, major suppliers and buyers including off-take agreements or supply contracts, other relevant information that could impact on the decision of the Lessor.
  15. Current invoice from approved vendors (attached appendix) on asset(s) to be leased.
  16. Detailed technical specifications of the asset, its year of manufacture, model, make, serial number, engine and chassis number (where applicable) and expected economic life of the asset.
  17. All outstanding debt obligations of the Lessee to creditors, including leases already undertaken which may be verified through enquiries.
  18. Clean credit report on the qualifying Lessee.
  19. Evidence of registration on the National Collateral Registry.
  20. Submission of list of members of the cooperative to benefit under a co-operative arrangement.
5. Agro-Processing Facility

Component of Agricultural Value Chain is to ensure National Food Security and reduce post-harvest losses. The Bank has developed a credit product known as “Agro-processing Facility”. The facility will provide funds to existing or potential private investors who desire to establish an urban or cottage Agro-processing industry. The existing or potential private investors might require one or all of the following:

  1. For limited liability companies
  2. Companies duly registered with Cooperate Affairs Commission (CAC)
  3. Agro-business to be a clause in the memart of the company
  4. Board resolution to access facility from bank of agriculture
  5. Provision of viable, profitable and bankable business plan/feasibility study.
  6. Evidence of registration with NAFDAC
  7. Recent tax clearance certificate required
  8. Last 3 years statement of audited account or statement of affairs in the case of new companies required
6. On – Lending Credit Product
  1. Provision of security which could be collateral security or irrevocable standing payment order (ISPO)
  2. Provision of viable profitable and bankable business plan
  3. Interest rate negotiable
  4. On-lending organization responsible for recovery of the loan inclusive of the accrued interest
  5. Reduces cost of loan administration
  6. Allows reaching many customers.

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