BoA's New Loan Model Aims to Curb Diversion in Agriculture

Ayodeji Oludare Sotinrin, the Managing Director and Chief Executive Officer of the Bank of Agriculture (BoA), stated that the bank is focusing on the impact of agricultural loans rather than profit. During an interactive session with agriculture correspondents in Abuja on Thursday, Sotinrin explained that the bank has implemented a financing model where approved loans are disbursed in kind through accredited input suppliers.

This model prevents the diversion of loans intended for farming activities. Farmers can select their preferred suppliers, provided they are verified vendors of genuine agricultural inputs.

Sotinrin clarified that the bank does not allow borrowers to purchase inputs directly with the loan; instead, once a farmer specifies the required quantity and type of inputs, the bank pays the supplier directly. Only about five percent of the loan is released in cash to cover logistics and incidental expenses.

This approach is designed to mitigate the risks associated with unrestricted cash disbursement, which could lead to misuse of funds.