Post by Ismail AbdulAzeez on Aug 8, 2012 21:43:10 GMT 1
A stock exchange is to act primarily as a source of raising relatively cheap funds for corporations. In a country where various agricultural financing windows have been elusive to majority of the farmers, and where getting funds has been downright expensive going by prevailing interest rates, there is a gradual but steady hope for agribusinesses in the stock exchange.
In Nigeria, agriculture is a very important aspect of the economy providing employment for about 70 percent of the population though majority of farms still operate with rudimentary equipment. In recent years, with the pressure on the leaders to diversify from a mono-income economy, there has been a remarkable influx of the elite into agribusinesses.
Also, various interventions by the World Bank in collaboration with the country’s federal and state governments have also brought about remarkable growth in a number of farming enterprises.
Such interventions as Fadama 1, 2 and 3 and the Commercial Agriculture Development Projects (CADPs) which give subsidies in form of grants and provide different forms of supports have been able to lift farmers from subsistent levels to commercial levels.
Many farms have now registered as limited liability businesses but accessing finance even with the various interventions by the Central Bank of Nigeria (CBN) is still very difficult. Oftentimes, farmers desperately in need of cash have resorted to taking consumer loans which are meant for civil servants and working class professionals to purchase household appliances with high interest rates.
The interest drawback programme (IDP) also aims at giving farmers loans at reduced interest. The farmer gets the loan from commercial banks at the prevailing interest rate at the time and then gets back 40 percent of the interest paid on the loan provided the loan was paid back within the stipulated time.
Many farmers that repay the loan within the stipulated period have not able to get the interest drawback on the loan collected. The bank is expected to prepare papers notifying the CBN that the loan has been repaid and CBN would then pay the interest drawback to the farmer through the bank. The affected farmers are uncertain about who the defaulter is – the commercial bank or the CBN.
The Nigerian Incentive Risk Sharing Agricultural Lending (NIRSAL) scheme has also been slow in implementation since it was launched and this has brought to the fore the need by farms and agro-allied businesses to consider the stock exchange as an option in raising cheap funds.
Nnamdi Everistus Anaekwe, an agricultural produce consultant, revealed that the Nigerian Stock Exchange is a good place to raise money. But he is concerned about the current issues - low investor confidence and the inability of the regulatory body Security and Exchange Commission not being able to protect investors.
Source: yonline. com/NG/index.php/analysis/f eatures/41923-stock-ex change-new-hope-of-cheap-funds-for-agribusinesses
In Nigeria, agriculture is a very important aspect of the economy providing employment for about 70 percent of the population though majority of farms still operate with rudimentary equipment. In recent years, with the pressure on the leaders to diversify from a mono-income economy, there has been a remarkable influx of the elite into agribusinesses.
Also, various interventions by the World Bank in collaboration with the country’s federal and state governments have also brought about remarkable growth in a number of farming enterprises.
Such interventions as Fadama 1, 2 and 3 and the Commercial Agriculture Development Projects (CADPs) which give subsidies in form of grants and provide different forms of supports have been able to lift farmers from subsistent levels to commercial levels.
Many farms have now registered as limited liability businesses but accessing finance even with the various interventions by the Central Bank of Nigeria (CBN) is still very difficult. Oftentimes, farmers desperately in need of cash have resorted to taking consumer loans which are meant for civil servants and working class professionals to purchase household appliances with high interest rates.
The interest drawback programme (IDP) also aims at giving farmers loans at reduced interest. The farmer gets the loan from commercial banks at the prevailing interest rate at the time and then gets back 40 percent of the interest paid on the loan provided the loan was paid back within the stipulated time.
Many farmers that repay the loan within the stipulated period have not able to get the interest drawback on the loan collected. The bank is expected to prepare papers notifying the CBN that the loan has been repaid and CBN would then pay the interest drawback to the farmer through the bank. The affected farmers are uncertain about who the defaulter is – the commercial bank or the CBN.
The Nigerian Incentive Risk Sharing Agricultural Lending (NIRSAL) scheme has also been slow in implementation since it was launched and this has brought to the fore the need by farms and agro-allied businesses to consider the stock exchange as an option in raising cheap funds.
Nnamdi Everistus Anaekwe, an agricultural produce consultant, revealed that the Nigerian Stock Exchange is a good place to raise money. But he is concerned about the current issues - low investor confidence and the inability of the regulatory body Security and Exchange Commission not being able to protect investors.
Source: yonline. com/NG/index.php/analysis/f eatures/41923-stock-ex change-new-hope-of-cheap-funds-for-agribusinesses
