The Central Bank of Nigeria (CBN) has released new guideline for the private sector-led accelerated agriculture development scheme as part of its development finance programmes and schemes to expand access to finance to critical sectors and segments of the economy to achieve food self-sufficiency as well as diversification.
The scheme was introduced to engage 370,000 youth in agricultural production, in collaboration with state governments to address the food security and youth unemployment challenges across the country. The private sector accelerated agriculture development scheme will be funded from the CBN-initiated Anchor Borrowers’ Programme (ABP).
The maximum loan accessible under the scheme is N2 billion per obligor. Under the new guideline, the facility would be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland.
The broad objective of the P-AADS is to facilitate increased private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation and economic diversification.
The programme seeks to fast track land clearing for primary production of agricultural commodities; promote food security through the provision of large contiguous land for agricultural production across all states; collaborate with agro-processors engaged in backward integration by providing financing for extended land clearing in proximal locations for cultivating commodities for supply of industrial raw materials, support other capable stakeholders interested in unlocking land for agriculture through appropriate financing and engender job creation for individual farmers that will cultivate on the cleared land.
It has a five per cent interest rate per annum (all inclusive) up to 28th February 2021 under the intervention. The interest on the facility will increase to nine per cent per annum from 1st March, 2021.
The loan has a maximum tenor of six years with six months moratorium. While perennial crops have a maximum tenor of 10 years with one-year moratorium.
Title of the cleared land and other acceptable collateral prescribed under the ABP will serve as collateral from the participants under the scheme.
“CBN shall bear 50 per cent of the credit risk in the event of default by the participants,” the guideline read in part.
The guideline prescribes that repayment of the facility will be on instalment basis through the participating banks and spread over the EOP of the cultivated commodities.
The guideline that was signed by CBN director, development finance department, Yusuf Yila Philip spelt out eligibility for the intervention scheme.
Those qualified are agro-processors of agricultural commodities engaged in backward integration; prime anchors and commodity associations participating under the Anchor Borrowers’ Programme (ABP) with evidence of contiguous land readily available for clearing and cultivation of agricultural commodities and their companies and individuals with evidence of ownership of contiguous land readily available for clearing and cultivation of agricultural commodities.