Nigeria has earmarked 50 billion naira ($388 million) for lending to farmers at 8 percent interest in a new step towards reviving its weak agricultural sector, the central bank said on Tuesday.
The bank, which last month pegged interest rates on agricultural loans at 14 percent, said it would subsidise the new credit scheme by 6 percent. "The purpose of the scheme is to develop the agricultural sector of Nigeria by providing credit facilities to farmers at single digit interest rates," it said in a circular.
Commercial farming in Nigeria, the world's fourth largest cocoa grower, is hampered by poor infrastructure and a lack of funding as most farmers have no access to loans because they cannot provide the required collateral, analysts said.
The world's eighth biggest oil exporter is keen to diversify its economy and President Olusegun Obasanjo has introduced subsidies in the past four years to encourage farmers to produce more.