Tinubu budgets N1.6 trillion for agric bank – but will it fix food crisis?

The Tinubu administration says it is injecting N1.6 trillion into the Bank of Agriculture (BoA), aiming to expand farm credit and strengthen food production amid a deepening cost-of-living crisis fuelled by government reforms two years ago.

The Senate approved the allocation on Thursday as part of a broader N54.9 trillion federal budget.

President Bola Tinubu initially proposed a N49.7 trillion budget for 2025 but later raised the amount to N54.2 trillion, citing higher revenue.

The BoA recapitalization is part of the extra N4.5 trillion he added to the spending plan last week, according to Adeola Olamilekan, chairman of the Senate Committee on Appropriations.

Other allocations covered by the amount include N1 trillion for the solid minerals sector, N380 billion for irrigation projects, N300 billion for critical roads, and N400 billion for urban light rail networks. The military received N250 billion, while N120 billion was earmarked for military aviation.

In passing the total budget, the senators introduced N750 billion worth of additional projects, bringing the final sum to N54.9 trillion.

Bank of Agriculture’s struggles

The government-owned BoA, which provides credit to farmers, has long struggled with poor capital, bad debt, and governance issues.

As of 2019, the bank was in financial distress, with a negative shareholders’ fund of N65 billion, down from its N34 billion paid-up capital. By 2022, its negative equity had widened to N71 billion.

Agriculture and Food Security Minister Aliyu Abdullahi said last week that the government would recapitalize and restructure the bank to improve food security and make food more affordable for Nigerians.

Nigerians are currently facing the worst cost-of-living crisis in decades following the removal of fuel and electricity subsidies in 2023. Food inflation hit a three-decade high of 40.7% in May 2024 and stood at 39.8% in December.

“We are reforming the Bank of Agriculture to serve Nigerians. We are recapitalizing it to make food more accessible and affordable,” Abdullahi said during a visit by the Emir of Borgu Kingdom, Muhammad Dantoro.

Finance Minister Wale Edun also confirmed that the government has begun the recapitalization process. The National Council on Privatization (NCP) has tasked its technical committee with developing a roadmap for repositioning the BoA.

“With the Bank of Agriculture poised for revitalization, Nigeria’s agricultural sector is on the cusp of a transformative era,” Edun said.

He added that the recapitalization will be completed by the first quarter of the year.