Group Head, Agric & Solid Minerals Finance, Sterling Bank PLC, Dr. Olushola Obikanye, spoke with some journalists on the potential of the agribusiness sector and the public and private sectors can catalyse the process.
Most crucially, all of these can be achieved with increased participation of the private sector in agribusiness. However, all of these can be accelerated by making cheap funding available to stimulate participation and increase scale with smallholder farmers and agro-focused SMEs. This positions us uniquely to view the problems and analyse the variables, relationships and resultant effects. This guides the solutions we develop in implementing our HEART strategy, of which agribusiness sits right in the middle.
For example, financing ranks as one of the largest challenges faced by growing agribusinesses. To address this, we have increased our lending to the agribusiness sector from 10 to 12 per cent and are willing to extend further if the need arises. This funding cuts across the needs of producers and aggregators where loans can be provided in the form of inputs – seeds, fertiliser etc. That is how much we believe in the potential of the sector.
To address this problem, we have partnered with the Mastercard Foundation to develop SWAY AgFin – a single digit interest financing solution for agribusinesses run and owned by women and youths. With a flexible tenor, extending up to five years in some cases, we are seeking to involve a fresh generation of agribusinesses to increase production where possible and maintain sustained food production across generations.
Over time, most financial institutions have focused on the upstream segment – primary production, crop and livestock farmers. In the last five years, we have developed expertise in the other segment beyond the upstream segment and have been able to finance players within and beyond that segment. For example, SABEX has now evolved from being a platform that enables trading of commodities to an on-lending platform where farmers or aggregators can get credit based on the quantity and quality of commodities they have. We have partnered with AFEX in making this a reality by leveraging their warehouse network across the country.