Since the discovery of oil Nigerian banks have relied on truckloads of cash from ‘big oil’ to butter their bread.
But with the economy struggling to get itself out of the funk caused by the breathtaking crash in oil prices, the spell cast by big oil over our banks has been weakened.
In a bid to make the country more resilient to shocks from the oil sector, the narrow focus on oil has started to shift.
The latest catch cry from the federal government and all the way down to the hawker on the street has been ‘diversification’.
Just last month the Central Bank of Nigeria warned banks to diversify their portfolios and look towards creating sustainable practices to help out our Micro Small and Medium Enterprises.
This shift in focus is important because MSMEs are the backbone of Nigeria, critical to development and jobs and provide 60% of Gross Domestic Product in emerging economies around the world.
Backing this move, founder of Investor King Samed Olukoya said “banks need to start exploring other sectors like agriculture, real estate and invest in a long-term viable business for sustainable profit”.
“The healthiness of the Nigerian banking sector is directly proportional to oil sector performance…as long as commercial banks continued to rely on quick oil money, the circle will continue at the expense of real growth,” he said.
Banks like Heritage Bank have long seen the writing on the wall and are well underway in transforming and diversifying their portfolio to capitalize on growing sectors in Nigeria.
One example of Heritage Bank’s foresight was its recent N2 billion investment in Triton Aqua Africa Limited, under the Commercial Agriculture Credit Scheme.
Managing director of Heritage Bank, Ifie Sekibo, said the bank’s investment in TAAL enabled the company to expand its aquaculture businesses in Ikeja, Iwo, Aswjire and Gambari towns in Oyo, boosting job creation and food security.
“The disbursement of the N2billion loan and the readiness of Heritage Bank to treat Triton's application for another credit facility for the third phase expansion is part of the bank's support to one of the cardinal programmes of the federal government's administration, which is job creation and diversification,” he said.
“I want to be sure whatever facility Heritage Bank is giving will add value in terms of cash flow of TAAL. If I have your cash flow as part of your production plan it would make it easy for me to treat your application for credit.”
Group Head of Agriculture Finance at Heritage Bank, Olugbenga Awe, said the bank’s support for small-scale enterprises was well known and most of these SMEs play in the agriculture sector.
He said Heritage Banks considered agriculture as one that can empower individuals and communities in terms of creating wealth from the soil and through the entire value–chain using value addition and industrialization.