COMMERCIAL banks in Fiji have $3billion sitting idle in the system earning minimal interest rates – they would be more than happy to lend, provided the projects are viable, have a balance sheet and a cash flow.
This was relayed to the Parliamentary Standing Committee on Economic Affairs early this month by Reserve Bank of Fiji (RBF) governor Ariff Ali during the bank’s submission to the committee on RBF’s August 2021 to July 2024 Annual Report.
After their presentation, the RBF team was asked by committee chairperson Sakiusa Tubuna on what has happened to its policy that required commercial banks to hold four per cent of their deposits and liabilities to loans to the agriculture sector, given that in a recent farmers’ forum, it had emerged that not enough attention was given to agriculture.
Introduced by RBF in 2012, the measure in question was the Agriculture and Renewable Energy Loans Ratio, in which the RBF required commercial banks to hold four percent of their deposits and similar liabilities in loans to the agriculture, fisheries and forestry sector and two per cent for loans to the renewable energy sector.
While the ratio is still in place, commercial banks, according to Mr Ali in his presentation, adhere to stringent lending requirements under the RBF for the ultimate protection of depositors, hence, due to the decline in agriculture, which, for the commercial banks was primarily the sugar industry, overall commercial bank lending to agriculture had also declined reflecting banks de-risking from the sector.
“We used to have the agriculture loans ratio a long time ago. When I joined the bank, there used to be an agriculture loans ratio – commercial banks’ lending for agriculture – but in sugar.
“In the late 1990s when all these things about preferential price and the land lease issues came up, the banks started de-risking.
“So agriculture (sugar) has been in decline. When I joined the bank, sugar industry used to produce 400,000 tonnes of sugar, about 4million tonnes of cane (a year).
“Last year was the lowest in 61years – somewhere around 1.3 million tonnes. So, the agriculture industry has fallen…the sugarcane farmers numbers have fallen from somewhere around 27,000 to 10,000.
“The banks right now have $3billion – $2b in excess liquidity and $1b in reserves earning zero per cent.
“So the banks are more than happy to lend to a project that is viable but we need to educate these farmers to (i) ensure that they have a cash flow. That’s really important. Banks lend on making sure there’s a balance sheet and there’s a cash flow,” Mr Ali said.
He said what Fiji needed was large agriculture projects that can work with small farms and he called on all stakeholders to work together.
“Personally I believe the biggest potential for economic growth is in agriculture but we all need to work together, not just the banks.”
Note: This article was first published on the print version of the Fiji Times dated June 21, 2025
