The experiences of the past 52 years have led to the
conclusion that the progress and prosperity of the country is strongly
linked with the growth of the agriculture sector in Pakistan.
It is the agriculture sector alone which contributes
44 per cent in terms of employment, directly or indirectly, while two
third of rural population solely depends on the outcome of the
agriculture sector which plays the lifeline role for the national
A well organized and well disciplined agriculture
sector can really strengthen the government's hands to achieve the
desired results of the campaign launched by the government for poverty
alleviation from the country.
The Agriculture Development Bank of Pakistan (ADBP)
which is major source for providing financial services to the
agriculture however has failed to deliver the goods on account of
excessive political interference which also help producing a crop of
lethargic and corrupt work force within the organization.
As a result of inefficient handling and
politicization the agriculture bank has become the house of stuck up
loans losing recovery of 40 per cent of the disbursed loans to the farm
sector every year.
Due to poor rate of recovery, ADBP had to reduce the
portfolio of loaning and credit to the tractor industry from Rs6.57
billion in 2001-02 to Rs5.49 billion for the year 2002-03. The reduction
in allocation for tractor industry which play a significance role for
growth of the farm sector as well as the tractor industry just on
account of hopeless disbursement and recovery policy of the bank. The
tractor industry had raised its production capacity to 50,000 units per
annum but due to non-availability to credit facility its production
capacity is underutilized. Consequently, only 12,615 tractors were
funded by ADBP during 2001-02 against 19,169 tractors funded during
2000-01, while loaning portfolio further reduced this year from Rs6.57
billion to Rs5.49 billion the sale volume will also be reduced further.
ADBP has extended loans for about 2,317 tractors
only, compared with 2,909 tractors in the corresponding period last
Shaukat Aziz, Federal Minister for Finance has
recently expressed his concern over what he called the poor performance
of the Agriculture Development Bank of Pakistan, the main source of
financing arrangement to the farmers.
It is amazing that instead of running the bank purely
on professional lines to produce better financial results and commercial
viability, the bank is surviving on subsidies from the government which
may not work any more in the changing atmosphere.
ADBP, which is the major credit provider to the
agriculture sector, is virtually lying sick in the intensive care unit.
He described the status quo conditions in ADBP as dangerous as
overestimation demanded a visible change in the Bank's policies to
improve its working.
The finance minister has made it clear that
government was not providing funds to the ADBP for adding to the problem
of bad debt but to cater better and timely services to the agriculture
sector. He agreed that the Bank's perception was not good and one of its
major reasons was massive corruption. It is identified that political
interference and forced decision in the past as main causes of poor
recovery rates. The minister was of the view that the staff of the bank
responsible of such wrong practices as they had failed to introduce a
culture based on merit while disbursing loans to the farmers. The
government has taken measures for restructuring the bank as the world
class financial institution.
The Asian Development Bank (ADB) has offered
financial assistance for restructuring of Agriculture Development Bank
of Pakistan (ADBP).
The ADB wants ADBP as an efficient bank to cater
financial needs of the agriculture sector on commercial basis and
enhance farm production in Pakistan.
ADBP has got registered itself under the Companies
Ordinance 1984 with the Securities and Exchange Commission of Pakistan (SECP).
By virtue of that registration, ADBP is now a public limited company.
Acknowledging the importance of the agriculture
sector, the experts have suggested that a strong research and training
cell should be established at country level to overcome the hurdles
confront that textile exporters as well as agriculture export. The
training and research especially in the export of agriculture-based
products is of vital importance to produce quality products to face the
tough competition in the days to come after implementation of WTO rules.
Agriculture Sector still remains the main pillar of
the national economy in Pakistan. It was mainly due to the strong
agriculture base that the economy of the country survive in the backdrop
of excess politicization, giving an edge to the personal and party
interests over the country in the past, the agriculture sector provided
fuel to run the unfit vehicle of the economy in Pakistan.