REAL REASONS NIGERIAN BANKS REJECT RURAL LAND AS COLLATERAL

  According to the Chairman, Chartered Institute of Bankers of Nigeria[CIBN], Mr Abolade Agbola, a controversial clause in the Land Use Act is the main reason why banks reject rural parcels of land as collateral for loans.He said ;'' The Land Use Act made it difficult for rural farmers to access agricultural loans using lands as collateral. The Land Use Act says if your land is acquired for public purpose,the only compensation you will be given is that of development on it. But if I clear the land,it's a development.If you clear 10000 hectares of land today as far as the Land Use Act is concerned,it's only when there are economic trees on it that you can be compensated.So,that land has no compensation. And that is one of the reasons why rural lands are not presentable as collateral.''
   He lamented that the unfavourable situation had prevented rural farmers from accessing agricultural loans which could have enhanced farming and food security in  the country.

SOURCE: PUNCH