FG targets N310bn through TB auction in seven days

The federal government of Nigeria has concluded all plans to raise a total amount of N310.22 billion a ($984.83 million), through sales of short-dated treasury bills at an auction on March 1.

Its Central bank disclosed on Tuesday that it plans to raise 26.14 billion naira in three-month debt, 62 billion in six-month bills and 222.08 billion in one-year notes, using a Dutch auction system. Payment will be due the day after the auction.

Business Times, however, observes that the government through the central bank issues treasury bills twice a month to finance the budget deficit, help manage commercial lenders’ liquidity and curb rising inflation.

The nation’s year-on-year (yoy) inflation accelerated to 18.72 percent in January, its 12th straight monthly rise.

It is of worthy of note that the government is facing funding challenges due to the low price of oil. It expects the budget deficit to widen to 2.36 trillion naira this year as it tries to spend its way of out of the recession.

Just recently, the federal government raised not less than $1 billion from Eurobond sold at the international market to finance capital expenditure and deficit in its budget, subscribing to it about eight times over.

Given the success of the $1 billion Eurobond issue, which was subscribed to in excess of $7.8 billion, translating to an oversubscription of 780 per cent, analysts have posited that the development showed that the Nigeria’s economy is still resilient and attractive to foreign investors.

The $1 billion Eurobond, which is a borrowing with an annual coupon of 7.875 per cent over a period of 15 years is a third issue by the federal government with February 16, 2032 as maturity date for repayment on the principal. The precursors were issued in 2011 and 2013. The $1 billion Eurobond issued under Nigeria’s newly established Global Medium Term Note programme.

Keystone Bank boosts Agric with N350m credit
Keystone Bank has boosted the Anchor Borrowers Programme with N350million credit line covering 1700 farmers starting with Taraba and Sokoto states.

Managing Director of Keystone Bank, Mr. Philip Ikeazor, who disclosed this in Lagos, underscored the importance of financial institutions in driving the agricultural sector.

He said:“Financial institutions have a crucial role to play in providing support to players along the agriculture value chain and the Central Bank of Nigeria’s (CBN’s) initiative of the Anchor borrowers programme is a step in the right direction. Financing in agriculture is one factor of production, which facilitates the acquisition, procurement and management of the other factors of production such as land, expertise and management”.

According to experts in the agricultural sector, the low volume of business in the rural areas where poverty is most prevalent cannot guarantee sustainable business activities to encourage the establishment of commercial banks to provide the needed finance for agricultural production.

Moreover, the cost implication of processing agricultural loans in the rural economy makes it unattractive for conventional banks to channel their resources to farming.

Although, the commercial banks finance agricultural activities but their credits are urban-based and so small that their impact cannot be felt in the rural areas where farming actually takes place.

Lack of priority attention to rural population in credit delivery by commercial and other banks in the economy contributed to the depressed economic conditions in the rural economy, and this situation also affects the overall economic growth and development of the nation.

With the recent focus of the Federal government of Nigeria on diversification of the economy, Agriculture is being promoted in many quarters as the next frontier in driving the economy of the nation. The reason is not farfetched as agriculture was the major export industry before the discovery of crude oil in the late 1950s with cocoa, groundnut, palm oil being major export products among others.

The Anchor Borrowers’ Programme, which was initiated by the CBN as a sub-shoot of the Micro, Small and Medium Enterprises Development Fund (MSMEDF) was created to support farmers and increase their production capacity. About N19billion was disbursed in the last farming season with reported 90% success rate. The programme was initially designed for rice farmers only but the scope has since been expanded to other farming sectors.

Before independence in 1960, the economy was characterised by the dominance of exports and commercial activities. There was no viable industrial sector. After independence, agriculture continued as the mainstay of the economy. In spite of fluctuations in world prices, agriculture contributed about 65 per cent to GDP and represented almost 70 per cent of total exports.

Agriculture provided the foreign exchange that was utilised in importing raw materials and capital goods. The peasant farmers produced enough to feed the entire population.

But Nigeria’s status as an agricultural powerhouse has declined drastically over the years. While Nigeria once provided 18percent of the global production of cocoa, second in the world in the 1960s, that figure is now down to percent. And while the country produces 65 percent of tomatoes in West Africa, it is now the largest importer of tomato paste.