Banks to get agric loan from CBN at 2% and give to farmers at ‘maximum 9%’

The Central Bank of Nigeria (CBN) has unveiled the guidelines for the Anchor Borrowers Programme (ABP), which aims to create about one million direct and indirect jobs by 2021.

The guidelines, seen by TheCable, show that the CBN earmarked N220 billion for loans aimed at developing the agricultural sector towards self-sufficiency.

The programme was launched by President Muhammadu Buhari on November 17, 2015, and it is intended to create a linkage between anchor companies involved in the processing and small farmers.

According to the guidelines, commercial banks, development finance institutions, and microfinance banks involved in the programme can access the fund at a two-percent interest and give to farmers at nine percent.

“The Fund shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF). Loan amount for each SHF (small holder farmers) shall be arrived upon from the economics of production agreed with stakeholders,” the guidelines read.

“Interest rate under the ABP shall be guided by the rate on the N220 billion MSMEDF, which is currently at 9% p.a (all inclusive, pre and post disbursement). The PFIs (banks) shall access at 2% from the CBN and lend at a maximum of 9% p.a.”

The programme allows farmers to get loans from the banks to farm, with a condition that the harvested farm produce must be sold to an anchor – a private large-scale integrated processors who have entered into an agreement with the SHFs to off-take the harvested produce – at agreed prices.

State governments may act as anchor upon meeting the prescribed conditions.

“The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food.

“At harvest, the SHF supply his/her produce to the Agro-processor- the Anchor who pays the cash equivalent to the farmer’s account.”

The programme ensures that farmers get to sell all they harvest to the anchor, with no selling to anyone outside the anchor borrowing programme.

“Loans granted to the SHFs shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at designated collection center in line with the provisions of the Agreement signed. The produce to be delivered must cover the loan principal and interest.”

Farmers who side-sell would be blacklisted from the anchor borrowers programme.