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TIff GlIARDL\N, Monday.August 8, 2011
Business~ D_,_lview Agrie revolution now needs to go
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Sanlllraki
Dr. Muhammed Santuraki is the Managing Director and Chief Executive Officer of the Bank of Agriculture (BoA). With the mandate to improve access of operators to the much needed operational fund for the agriculture sector, Santuraki, in this interview with SAXONEAKHAINE of our Kaduna Bureau, explains the strides made by the bank so far to reposition the primary industry. Excerpts. 1 " JHATtm't brmthtaaMtlescldJJs bW:sIru irKrp- So. _Identified core areas on Ivhidl _ should con-
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La me stan bv way of Introduction. The S,mk of ,\gricullUrr: is tIll." ilpt!l[ agriculture ind rural dM'lopment finance Institution in thlsrountry. nll~ InstJ[U. tion \~ aawlly fanned In the st'Ventt~ that Is, ;1bool 1974. In itsrurrtnt ronn, It has Its origin In thc year 2000 when the then Nigcriol NmcuJrur.d ;rnd Coopera~ Bank (NACB) merged wTth the rmplcs 8.1nk and the risk use( of 1M F~mlly h!l"lflccment Pro~mme 10 form the Nigeria Agr1cuhu~ 1 ~tM and Rur.l l ~JopmMI ~nk. WI! had all kinds of mandates, bul thqo can be divided 1n10 thrft main a~as:: thedlsblll'SeflYnt of CRdilloagrlcult\l~1 and rur.ll S«tor of the ~ml\ to enpge In rural savings mobilisarion .lind tM encourage"mmtoftheb.JInklnghablt.llndcapadtybulldlngand to support agriculture .lind ru~r economy lhrough mttlSlon service. m:hnklll suppan, In temuof agrlcu[tu~[ information systems ,nd cooperat1~ dew!opment Wt came on bl»rd as management of the InstJt\lllon in ~tem~r [ut ye:ar. When we came. we dlsc:OVI:red tl>~t the tnsrltutkln ~ed 10 be ~mpM. J am YeIy furtunale 10 h,we been part of the Institution In the rip,hties.1 arm! hen! In 1983 and left In 1939and 50, 1 h.KI some experience In this SK10r.llOO I wu aWolf'e o f what It was .11 thai time
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varioUs problmts :mch as lack of funding. qu.alicyof Io;ans.. Ci.!padty ,md the ~ of them. So. what we dtdd«l. to do was 10 reposition the Inslitution because the keydlaJlenge has bH:n funding. We sal down with the newEXCOandsald,therewu no ~ we could continue the way we were going. IIgtiruituTl' Is very Important and 100 Imponanllo be [eft alone fo r commercial banks. So, we decided thatwe munreposltion the in51ilution toplaya lead· Ing role In agncu[tuR' and run.1 develoPment and one of Ihe key issues wu the Issue of sus(;I.ln.llbllity beause every year, the Institution tYd had 10 go back to gOVl'mment for rKOIplta ltgtlon. So. we saJdlhill dUngs cou ld not continue lh;il WoIy and dedded thai we must reposition the Institution.
~te market ~D)' aoo this will holIppen In the IYf'eks. Wl!'.lIre going 10 launch our new b~nd; we illl! xotng 10li.1ve.ll big f'Yeflt In re-entenng the malReL The second thing as filr ilS modenlsallon broilcerr.ed Is IT. because IT Is vel}' Important In the 21 5 cellt\lry. We n~ IT (0 be moruffidentand lawe'l'ourcost of servJl:t dellvt'nng.So, we said lhiII we h.JId 10 enhance our IT drastically and then do a 10( ,",'Ork tool rq>I.lICement.llt our point of ronlilct, whkh ilre our bn.nches. We need 10 ImprlJ'o,! the ambience of our b~ndies rouid dr«tl~ly pursue its mandate.. The' third thing .lind then f'quip them willI modem facilities so _ set 10 do \Yil"l10 enh.Jince the apadty of our pe0ple. In the seYet\des and eighties, NACB had the domaln expertise i'oragrirultun.1finana. nl~was the second Issue oT rl!'focus~ we ha~ donI!' nothing)tlll did ~t tNt rtme as f.lr as agriculture Is tJlings In rdatlng to IntUTl.lll effidenq and promate the Intem.Jll dlldelK)' In lhe arganisa· tlon: refocus the instJrution ilS ~ bank. h.Ji~ ~ SoJid Lll.JIl we _re going to bring back theapad- ImprOVt' audit and mntroL we ha~ put In ty of our people In areilS rnat a~ Clitia] to national pl~ce Impl"OV!d Internal risk managemtnt 10 development We ~ going to do II by rttnlnlng be able: to reposition our peopl~. We c.an eU«them, by exposing !.hem 10 new thtngs.llnd by build- tillely pursue ollr m.tndate at a lowercost Wh~t IngLlleirski1ls. nle5e thlnp(OYefthe~~reu.the wUC1uallj inlrnd to do Is tochangi! theoper;1tpnxesses. the people and Llle r«tJnology. So, we SoJId In~ mode the Instit\luon, al the thai WI! were KOing to do this. In roms of rtbr.md- poInt we all' 1'10\\\ sm.tU Inmmental lmprlJ'o'eIng. NACB hatfbtf'n seen more ilS a disoenser of goY- ment will notSf'f1leour purpose. We need tt.lIns· f'fTUIlMllargesseand _said taOWleMsthat tfiese formadonal dtange b«.ause this is whoal this things cou ld nol continul' aoo (aowry a message country need.. We flaY! bil so much ume in this that this WiJS a new Instit\ldon. This llUI..itutlon w.u: country thaI to be able to [omfombly comPf'le going to be run wtth private SKIOr disdpline .lind and mnd shoulder to shauJdtt with our conone of the ways to do lhiIt was 10 totally change our tempon.ries In thl!' world. We need 10 mIlSoutiookSIO that wecould prestnn newlmage 1n the form ,nd that Is wholt we want 10 do al the level people's mind. So, we said th,lt _ were going to of the InstJtuoon. We wanl 10 tr.IOSfOfTTl thl' ch.Jinge our n.tme to a !Impler name, whicFi people alltratlng modd so th.at_ an be much more would rtm~mber euily and that W.llS In line with sust"i!llliIble In teons of government funding. global best praake We wanl a sltu.luan where once govemmrol We also said that _ were going 10 ch~nge our recapltallses us, wewlll beon ourown and will brand and refreshen II so that we could crt.1te ~ mort nat only be .lIble to deliver returns to ~m exdtlng Instit\ltlan. So, part of the thr~ legs of the men!, bUl.lllso deliYu the much desirea sodal rebranillng agenda was the change .lind Im~ beause as a d~kJpment finance Insdrebr.indlng. We have sucaednS in changing our nmon. sodaI impact Is vrry ImJX'":lnt. How name and _ ha~ substanti.lllly complf't'M our many brmers or IU~I mtetpnses ha~ you reb~ndlng.llnd whit Is left Cor us Willi todoan cia!» rlNnadl For haw many Jl«IPfe IVVf' you mat-
Caltrate: ~ernlsatkln of the institution b«.ause this Is the 2' S centu~ and \ve must brtng il to standard ~nd more efficient WI! also SoJId that we _re 10 refocus Iill' Institution In [emu o f rocuslng on its own milndille .lind run It moreas.ll bank than ~nyOlherparastatli, bKause It Is.ll bank.So, _ musl ha~ the dlsdpllneor running a Hf1,1ndaJ tnstirution..ln that prouss, _ came up with the thm! Rs. whkh means that _ \oml! 10 refo-
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cd jobs? Ilaw ITliIny people luve)VU empov.1!red? So, In our mmia. thne are some of the key performilnce IndkillOtsilpan from tJ~ financial indicllars. Tlut is thed[lfelence ~n rommerclill banks ilnd us. The commerCial banks wtU rocus entlrtlyon returns. But we also h.Ji~ socia[rttu ms.. btcau~ we h;rve to create lobs, reduce ~rt)\ Improve food stCUrily. ThaIiJ: the main thing we a~ focusing now.Jllld we want to introduce new ddl~rtng channels by strengthening ou r whol~ sale windows where, .lipan frOm dealing with the small lanners, we a lso MOl 10 dul with onlenders.. We w.mt to be able 10 rOfTTl mlcru finance InrolUtlon~ and eventu.111y cacnmnci.lJ banks., because II~ I said, _ ha\'! the expertise ror agricultur.ll filliloce. My lap len people In this bank have a colkah'! 200 ),!U'S openen«' of ilgrirultur.ll rU\.Jllltt.. tlltrl' Is no Instltulion In thl.!; munlJ)' wheR)'Ou an have lhiIL So. \~ wimt to drtw: LlXlSe changes.. ItnlMdJiIItiy you iWUmed alll« last year, you heJd a meetiJul; with micro flnance banks acrnss the coWltlywlili a view to using them to rtiKh the rural I'arrilI!'I'S. How far has thilt ~rtnershlp
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We are still wortdng on the partnership. You know lhiIt thl"J! has bf'en some challt'flges In thollt S«t0l" .JIIId so. wh.Ji1 we ha~ done Is to hOld ~ a nd see those that arl!' serklUs.So, we.llre still In LIlt proctSS o f sattning them ilnd selecting the few that M:'
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to ~rmers ba~ed on our f~me\YQrk through mkrolin.llrKf' banks. 8ut we are a~ful, b«ause we want to se[tct ilnd ,",'(Irk through the banks that art nuly doing thl!' microlil1olnce bU$lm~s. WI! hilve gotten ilpprOWl[ for thollt product and vel}' soon, weare go[nglo roll out W'hat wewilnt 10 do Is to use this "500 million ilS a pilot In the entire ru gcopoiltlal zones. So, I~ are In the proctSS of Sf'IKiing the panneD tholIl \~ are going 10 work
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Is the Bmk of Agr1ruJture to com. peteWtttirooYl!:lltionaJ rommeidaI banks?
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TIfE GUARDIAN, Monda}\ Augusr 8, 2011
beyond lip service, says Santurald Uke I said, we ail' development finance bank and so. the issue of competition does not arise, because Nigeria Is a big market ~nd there Is room for every player. If you look at the proportion of bank lending that goes into agriculture, you will know that there is no / competition. Till date, WI" have lA, percentoftotai bank lending that goes into ilgriculrure. Kenya, a much smalJercountry has six percent. Bmi] has 18 percenl So, there is enough room for all the players and I lhInk that they will JUS[ play their roles. there arl' about IS mUllan smallholder farmers In the COUntI)' ~nd so. the Tucll is wide and any bank that can get It nght will also • make a \otof money from this buslness..So, for us, it is nat a matter of competition, but a matter of undersanding the business and pursuing It and be1!n able to creale me neces.sary social Impal1 while also rerurning adequate financial rerum foryourshareholders_ 1-~~'.l.!"~;""1 What tlfoiU art you making to ensure that farrnm: palrOrlW! you lruttad of going to tht intUtSt fret ~!li;t~i:;';~:ll;l1.J banks now being lnO'Odua!d into thecounoy? ';( , Nigeria Is a Vtry bi~ markel with about IIJ: milllon .- 4':1 hKLlreofland 11...1 IScultivaablein this country. Out 1, _ ~ of thar, only about 12 milllon is undercultlvaLJon. So, where is the compl;titlon7 We hilve so much undone thill there is spaCt for every player ~ far as I am con.; _ cerned. Some people will go to the I5lamlc Banks; Ihere are ~1so 24 commercial banks where some people will go. Uke I have wid, agriculNre is tOO big to be left to ~ one institution alone.. nll~il' is a space foreve.ry instiN- L -I lion to play. So, It is not a mauer of compelluon. Also, SantUfald Islamic B.lnklng is not ~ even though it may be Inter~t free,lr Isnkt is profit sharing arrangemem_ So, pe0ple will decide whal th ~y Willl[ lO do bNiluse democra.- The problem is that there is too much emphasis on the issue of fertiliser. cy is aU about choice.. If some people decide to go fO the Fertiliser is not the biggest problem of agriculture in Nigeria_Indeed, one Islamic Banks tJlat is also flne.. We need various channels lO deliver linance in this country and so, we don't of the farmers' groups said recently that fertiliser was number 14 of their llave problem with thaL How many funners have you really turned their foe· priority, but unfortunately, government has tended to focus on fertiliser_ runes around and how mUch do you nud to function Now, the key issue in this country is productivity. w.IIl From the time we" ~rriVM tllI elate, w~ can look at Ule cumulative result to PUt things In proper perslJl"Ctlve.. In lerms of the soda l impact, since inception In th e year 2000, WI" 11a\'e disbursed abour N.u billion 10 about 530.000 enterprises, employing about s.3 mil, lion people. We have also openecl aboUI [\W) million account, moblllse ~bout ~300 billion In wvlngs deposit. Specifically, tven thou~h we art il'Strucruring, we hilve not slapped creatingloans and facUlties. For the first quanerof the Yedr, lve aaualJy gave out wno million to about 10,000 farmers, employing about Ll million people. Rightnow,ourJoan rate is OIbout ..soo mlilion per quaner because of the limitation of the finances that we have. This Is because we are OIctually concemr.uing on the smallholder farmtrs bec;ause that Is where 70 percent of OlIr mandate Is focusaL EveJy year the feder.! and state govemJDCflts.wend billions of naira on fen1llztr, yet: [almtrs an! stOJ Iilr from;u:hieving the deslred results. Whm an we gatingi[wrong7 TIle problem is that thtre is tOO much tmphasis on tllt Issue of fertiliser. Fertiliser is not the biggest problem , of ~gricul[urt: In Nigeria_Indeed, ant orthe farmtrs' groups !i.aid recemly that fertiliser was number 14 of · _ meirpriority, bur unfortunately, gOvtrnmem has Itnded to focus on fenlliser. Now; the key ImJe in thiscoun .Ji
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~JsfCC~ut~i~:[~ihlr~~~~~lOlt;l~~~~ Ellen wilh dIe level of ftrtiliserwe also Import, in tt rms of its utilisation perhecrare, weare doing less than 50 percentln lemlS o f what Iheopnmal appliGoltion ra ft IS. Even with what we aredolng in fi.'nU ~r, we" ail' still not fertilising our Land t nough. But any country that wants to undenake agriculLuraJ revolution, il USllally san from Impro\'l"d seedlings.. beQuse whatevel)(lu apply in lWns of fenillserwill be limited by the qualityof seeds)'Oll planL We have not gotten that right in this countI)t The demand for Improved seedlings In this counny Is over one million m etric (ons and we only provide 8000 meDic rons to our fanners. 50, fertlliser or any other soli nutrttional approach Colnnot 50Ive the problem of productivity. We'have ro ,uJop£ modern seeds, Fonunately, the new tea m ilt (he Ministry of Agriculrurt recognist:s this and what that means IS thai very soon, government will ~rrength~n the seerl production seGar of the ecnnOm'l' May Wi! know what you are doing to ~lla.lx)[ate with tho!! various SQttgovemmtnlS ttl develop th.eir;agrirulrurc sec:tor's potenl:ialsl Ont of our acces.s c.hannds Is the wholesale channel where we on-lend through instirutlons. One of the very succwful produru WI" have Is our on-ltnding programme through tht sale governments.. We.drtve some of thtm; somt of them art al the requesl of the various stales. Right now, we are In touch with a few statt governments with a view to hi!:lplng Wir smallholder fannen. TheywiU provide some fUnding while we providt counti!rpan funding so thai we Increase the pool and then, w~ use our expe~ and re.u:h in the seaorro manage the process. Weare notdolng this wilh only thestale governments.. There are other stakeholders inwlved. For aample, we have JUSt tmered InloanagreemO!fltwithNDDC. Theyhaveminoosomt of theiryomhs in that region in thtareas of run! enterprises and agriculture and they have set aside some fund. and we are going to work together to disburse to those people Illerlwve mined. W~ have parmership in other nates and the WI one we did was In OsunStaI:e \Vhat WI" \vant to do now Is to system.at~f inwlve otb.er govemmi!nts. Definitely; we are worKing with the state governments to Improve our infr.lSOlJCNil' SO that theyc.an ruch their fanners. lNh.Itdo you dUnk need to be done and wby Is g0vernment finding It d1fficuJt to fund ag:r1culrurr: in a way that It will compete with aU as a major source of feY.
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~~~ t=~u~"rth~~j:rn&,=e~5ef~~~~°::t~~ . loans tll,;I{ we give. amounting ro U250, 000 we ;lawlIy give them 1'o1thOlit collareral ]1 Is USUilUy on Ihe basis of group lending. Tht group approaches us for the facUity.Alr you need is 10h.lve lani:iand be pan of a group and have some kind of cross guara ntee ~mong group members.. II Is very OIur.u:tive fo r the unenl' ploYlod )(Iuths bl"caust: they don't need collateral 10 obaln tilt loan. So, the entry banier is very 101.... Admluedly. th e rl'Sponse in [enns of young unemployed youths is nor very encouraging, bllt we h.we seen a trend. ,.,losl of them are nor ~d.ually going Inlo cultl~allon, bUI into fish farming. poUltry OInd other types of fanning that Coln be done m Ihe semi urban ;md other fl.lToil areas. llla5e ~re the areas that is de.:rr to us and Ont of the ways we are Dying to amad. lhese people is to use a new chilnnel of service deliveIy and Ulat Is m t mobile banking. Youths are amad.ed to technology and pan of our refonn progr.unme is to use our mobile money pl;;rform to reach those kinds of audk'ncl'. Hutas we uruoLd our rn;;.rke:t rN"nuy plall, we have new produns, which WI! will unfold won which are spKiHca Uy targeted at tile unemployed
",mlu. How do )'OlIlntl:nd to O'ialDme finances you mendoncd as one of your majorchal1eng;es7 Wi! re~lly havt seriouschal1tnges In tennsof filndlng. For e.umple, when the instirution was rreared In the yur 2000, the arrangemem was to rec:apltaHse II to me tune ofNSO billion. Till now. w~ have only recej~ about Ull billion over 01 period of more Uloll1 10 years and in very small installments.. For ~ developm~m financ~ bank that relies on cap ital from otllerlnt~rven lions, it is very difficult forus..lt is because of some of these difficulties that weart now trying to change OlIr operating model TIll" model UWt we" haw: now which most development finance Institutions have " not 5U... lainable, btCaU.'it you cannot haVt a suslalnable retail credit sysrem without a 5.lvings component. So, how are we gOinglodl'al wiUI tha t? Someof the changes we are doing is to i"nsure that we hilve, as pan of our ma ndal~ Ihat we hilve a very m -o ng !i.a\1ngs component. So. what we are proposinj!: is 10 actually resnucture Ihe , instirution to [\W) maJO r divisions. We will have the
Sanlurakl
Till now, we have only received about N21billion over a period of more than 10 years and in very small installments_For a development finance bank that relies on capital from other intelVentions, it is very difficult for us. It is because of some of these difficulties that we are now trying to change our opera~ng model.
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enut for lhe countty7 Wh.,t{ you gid is true, bur uj\fomm~te ly, the all sector has dlslr.!.l1ed us from the Ihings that we should be doing in me agriculrural sector bec"use oil proVIded tasy resources to pursu~ somt of our dev<!\opmental programmes. Fonunalely, I think the present government is "Wart o f UI~ need (0 actually go boltk (a Ihe basics In terms of wlwt is happening aixl in temu o f agrtculrure_ You know that thert are lou of 5Chemes IIi~t are going on ilnd Ih e government has mlisect UWL lll<!re are several schel.1.tS In plaCt, like the CBN's woo billion agrirulturaJ credjlsch~m~, which is part ofth~ need 10 reposition agriculrure. Recenuy, we 1w.d the Nigeria Incentive based rtsk sharing system for agriruftural financing which is su pposed to reduce Iht risk In agrtculrure. They prolVlde Incentives for bolnks to acruany Ii"nd 10 agnrulrure. It Is true that agriculrure has been nt;glected, bur I thInk thai now; govern, ment Is aware of some of Ihese wrongs and is uyin)i: to conectthffil.llisonthisframeworkma(weart!i.aymg that as UlI" B.ankof Agriculture, we mU.'ilplayourrolt ' and support this mnsformarion as weD as suppon thlstransformalion of th teconomyln Il"nnsofgolng batk 10 the basics. What has your o rganisation done to tnrure that unemployed youths are encoufil~d to take up agrt. cu1tnR as a source of tmplaymenO TheissutlshowweGolnanra.ctyoungfarmersbecause our fanners ne aging and need to be replated, TIle young graduates will not see agrirul tlJ ri" as our f.lUl<!rs and gr.Ind f.lthers ww It, beause it will nol be OImactive to them. So, whar we n~ to do is to modtrnist! agriculture in lenns of IlloIdlinerie; and rethnology and !he only way we on do this Is 10 provide them with mooml agriculturaJ toOls using mOOmlagricul-
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The mlcrofinance division will be ~lated irS a bank bV the CBN, and so ulMe will be pnvaU! St'CI.or disci, pline. Pi\rt of the challenges of till" model \w: ~re running now is that there is more emplwsis on 100m creation than wvings mobilisation. If you have these structures, the micro finance banks will also be Jnwlved in savings mobilisation, which will not feed I loans creatlon. 11 has beellsoown UIolI tht propensity to wve even among the rural populanon Is about seven times the propensity to borrow. So, you will halle a system that is feeding each other and 0111 you need Golpltal for now is 10 dO tht usual thlngs)(lu do with CiopilaL We believe thOl( ulls will succeed because this kind of thing has been rrild elsewhere.A lotof the agriculN ral banks that are succeeding loday are either · h eavily dtpe:nd~nt on KOvtl'TUllent's annual hlIdg~1 and the ones that hilve been reformecl and repositioned Given the paudly of resources thaI we llave in this coun~and In view o f our developmental chal-
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Islamic banking is not free even though it may be interest free, It is like a profit sharing arrangement. So, people will decide what they want 10 do because democracy is all about choice, If some people decide to go to the Islamic banks, that is also fine.
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[; problem, and we believe thar it will also Improve aUf read!. We are also looking OIl other delivering channels.. Weare looking at srrenglilenlng o ur rooperatlve model where we do group lending because Ir is more ~ect.iVl' and cheaper. We beli~ that If)(lu ha\~ a vel}' mong wvings component In ~ retail banking system, Ihere will be adequate provision In ttrnlS of risk managemenL In ttnns of susainability, government poliey is also Vtry Imponant because sometimes, we ~re trealed as ~n Institution that is jU.'it ther<' to dellvergovemment pro.
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