THE GUARDIAN, 08 AUGUST, 2011

xl TIff GlIARDL\N, Monday.August 8, 2011

Business~ D_,_lview ~---------------------------~--~------------------------~

Agrie revolution now needs to go

Sanlllraki

I I I ! I

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 irKrp­vv .... , 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 SK-10r.llOO I wu aWolf'e o f what It was .11 thai time

so'fn~ d~~~!'::.[j~~:~~~~,=u':o~ 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 could not continue lh;il WoIy

and dedded thai we must reposition the Institution.

So. _Identified core areas on Ivhidl _ should con­Caltrate: ~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 of 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-

~l ~~:: ~~~tere:=~~.lI~=fU:O~~~ rouid dr«tl~ly pursue its mandate.. The' third thing _ set 10 do \Yil"l10 enh.Jince the apadty of our pe0-ple. In the seYet\des and eighties, NACB had the domaln expertise i'oragrirultun.1 finana. nl~was nothing)tlll did ~t tNt rtme as f.lr as agriculture Is

~~m~I~~\~:!7~~~r~~a~ ~ SoJid Lll.JIl we _re going to bring back theapad­ty of our people In areilS rnat a~ Clitia] to national development We ~ going to do II by rttnlnlng them, by exposing !.hem 10 new thtngs.llnd by build­IngLlleirski1ls. nle5e thlnp(OYefthe~~reu.the pnxesses. the people and Llle r«tJnology. So, we SoJId thai WI! were KOing to do this. In roms of rtbr.md­Ing. NACB hatfbtf'n seen more ilS a disoenser of goY­f'fTUIlMllargesseand _said taOWleMsthat tfiese things could nol continul' aoo (aowry a message that this WiJS a new Instit\ldon. This llUI..itutlon w.u: going to be run wtth private SKIOr disdpline .lind one of the ways to do lhiIt was 10 totally change our outiookSIO that wecould prestnn newlmage 1n the people's mind. So, we said th,lt _ were going to ch.Jinge our n.tme to a !Impler name, whicFi people would rtm~mber euily and that W.llS In line with global best praake

We also said that _ were going 10 ch~nge our brand and refreshen II so that we could crt.1te ~ mort exdtlng Instit\ltlan. So, part of the thr~ legs of the rebranillng agenda was the change or name .lind rebr.indlng. We have sucaednS in changing our name and _ ha~ substanti.lllly complf't'M our reb~ndlng.llnd whit Is left Cor us Willi todoan cia!»

~te market ~D)' aoo this will holIppen In the next couple or IYf'eks. Wl!'.lIre going 10 launch our new b~nd; we illl! xotng 10 li.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 215 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( or ,",'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 .lind then f'quip them willI modem facilities so

~~~~b~~~~a~:~=::r the second Issue oT rl!'focus~ we ha~ donI!' tJlings In rdatlng to IntUTl.lll effidenq and pro­mate the Intem.Jll dlldelK)' In lhe arganisa· tlon: refocus the instJrution ilS ~ bank. h.Ji~ ImprOVt' audit and mntroL we ha~ put In pl~ce Impl"OV!d Internal risk managemtnt 10 be able: to reposition our peopl~. We c.an eU«­tillely pursue ollr m.tndate at a lowercost Wh~t wUC1uallj inlrnd to do Is tochangi! theoper;1t­In~ mode or the Instit\luon, bKause al the poInt we all' 1'10\\\ sm.tU Inmmental lmprlJ'o'e­ment will notSf'f1leour purpose. We need tt.lIns· formadonal dtange b«.ause this is whoal this country need.. We flaY! bil so much ume in this country thaI to be able to [omfombly comPf'le and mnd shoulder to shauJdtt with our con­tempon.ries In thl!' world. We need 10 mIlS­form ,nd that Is wholt we want 10 do al the level of the InstJtuoon. We wanl 10 tr.IOSfOfTTl thl' alltratlng modd so th.at_ an be much more sust"i!llliIble In teons of government funding. We wanl a sltu.luan where once govemmrol recapltallses us, wewlll beon ourown and will nat only be .lIble to deliver returns to ~m­men!, bUl.lllso deliYu the much desirea sodal Im~ beause as a d~kJpment finance Insd­nmon. sodaI impact Is vrry ImJX'":lnt. How many brmers or IU~I mtetpnses ha~ you rlNnadl For haw many Jl«IPfe IVVf' you mat-

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 our 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 ......, 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 ~ and see those that arl!' serklUs.So, we.llre still In LIlt proctSS of sattning them ilnd selecting the few that M:'

~~~~':~~:~::~~~Iron~~~~~ 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 wi"'-How~ Is the Bmk of Agr1ruJture to com. peteWtttirooYl!:lltionaJ rommeidaI banks?

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TIfE GUARDIAN, Monda}\ Augusr 8, 2011 po

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_ What tlfoiU art you making to ensure that farrnm: palrOrlW! you lruttad of going to tht intUtSt fret banks now being lnO'Odua!d into thecounoy? Nigeria Is a Vtry bi~ markel with about IIJ: milllon hKLlreofland 11 ... 1 IScultivaablein this country. Out 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 con­cerned. 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 instiN­lion to play. So, It is not a mauer of compelluon. Also, Islamic B.lnklng is not ~ even though it may be Inter­~t free,lr Isnkt is profit sharing arrangemem_ So, pe0-ple will decide whal th~y Willl[ lO do bNiluse democra.­cy is aU about choice.. If some people decide to go fO the Islamic Banks tJlat is also flne.. We need various chan­nels lO deliver linance in this country and so, we don't llave problem with thaL How many funners have you really turned their foe· runes around and how mUch do you nud to function 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 sodal impact, since inception In the 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 creating loans 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-

~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 of what Iheopnmal appliGoltion raft 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 team 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 Iller lwve 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.

L l. L --

SantUfald

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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 of UI~ need (0 actually go boltk (a Ihe basics In terms of wlwt is happening aixl in temu of agrtculrure_ You know that thert are lou of 5Chemes IIi~t are going on ilnd Ihe 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

I the Nigeria Incentive based rtsk sharing system for agriruftural financing which is supposed to reduce Iht risk In agrtculrure. They prolVlde Incentives for bolnks

1-~~'.l.!"~;""1 to acruany Ii"nd 10 agnrulrure. It Is true that agricul­- rure has been nt;glected, bur I thInk thai now; govern,

~!li;t~i:;';~:ll;l1.J ment Is aware of some of Ihese wrongs and is uyin)i: to ';( , conectthffil.llisonthisframeworkma(weart!i.aymg

.- 4':1 that as UlI" B.ankof Agriculture, we mU.'ilplayourrolt ' 1, _ ~ and support this mnsformarion as weD as suppon _ .. ,:' ,.11 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

I ~ TheissutlshowweGolnanra.ctyoungfarmersbecause

11: our fanners ne aging and need to be replated, TIle young graduates will not see agrirul tlJ ri" as our f.lUl<!rs

The problem is that there is too much emphasis on the issue of fertiliser. Fertiliser is not the biggest problem of agriculture in Nigeria_Indeed, one of the farmers' groups said recently that fertiliser was number 14 of their priority, but unfortunately, government has tended to focus on fertiliser_ Now, the key issue in this country is productivity.

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-

~~~ 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 guarantee ~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. the 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 spKiHcaUy targeted at tile unemployed ",mlu. How do )'OlIlntl:nd to O'ialDme finances you men­

, doncd 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

.Ji 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 Sanlurakl

Till now, we have only received about N21 billion 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.

financ~ bank that relies on capital from otllerlnt~rven­lions, 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 man­dal~ Ihat we hilve a very m -ong !i.a\1ngs component. So. what we are proposinj!: is 10 actually resnucture Ihe

, instirution to [\W) maJOr divisions. We will have the

.. ' ~~~~I~s~I~~t!:cht\~ :l'e~~/~I~~b~:~I~e'!: 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 cre-ation than wvings mobilisation. If you have these structures, the micro finance banks will also be Jnwlved in savings mobilisation, which will not feed

"". T" ; •. 0,,, 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 agri­culNral banks that are succeeding loday are either

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.

· heavily 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 of our developmental chal-

~~~t~O~~ [; ~:fl~~a'1~nc:.~t~l ~~ problem, and we believe thar it will also Improve aUf read!. We are also looking OIl other delivering chan­nels.. Weare looking at srrenglilenlng our 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. gn=