Ecobank Transnational Inc. is partnering with the United States Agency for International Development and Rabobank to double the amount of credit it provides to the agricultural industry over the next two years.
USAID will guarantee as much as 50% of loans provided by Ecobank to Nigerian farmers and processors, Mojisola Oguntoyinbo, the head of agricultural business at Ecobank’s Nigerian unit, said by phone from Lagos. Separately, Netherlands-based Rabobank will help provide cheaper lines of credit to bigger players in the industry, she said.
Ecobank has 70 billion naira ($193 million) of performing loans in the agricultural sector and the lender will hold an investment conference next month in an effort to generate deals, Oguntoyinbo said. It will target crop and livestock producers, processors and commodity exporters.
Banks in Africa’s biggest oil producer are increasing lending to the agricultural industry amid a push by President Muhammadu Buhari’s government to diversify the economy away from crude. The Central Bank of Nigeria is also forcing banks to maintain a minimum loan-to-deposit ratio of 65% or face penalties, while supporting the government’s drive to produce more food locally and curb imports.
While Ecobank has a loan-to-deposit ratio of more than 70% in Nigeria, it is targeting agriculture to boost its “return on investment,” according to Oguntoyinbo. “Small and medium enterprises are growing rapidly in the agricultural sector and there’s huge opportunities there, which we don’t want to miss.”