By Dipo Olowookere
Central Bank of Nigeria (CBN) has announced the inclusion of non-interest financial institution in the N200 billion Commercial Agriculture Credit Scheme (CACS).
A circular issued by the apex bank explained that this was to deepen access to finance and reduce exclusion rate in the country.
CACS was created to promote commercial agricultural enterprises in Nigeria, which is a sub–component of the Federal Government of Nigeria Commercial Agriculture Development Programme (CADP).
The N200 billion funding package was put in place to complement other special initiatives of the CBN in providing concessionary facility for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small scale farmers, Interest Draw-back Programme, Agricultural Credit Support Scheme and other similar development initiatives.
According to the central bank, the scheme is financed from the proceeds of the N200 billion three-year bond raised by the Debt Management Office (DMO) and made available to the participating banks to finance commercial agricultural enterprises.
In its revised guidelines, where it announced the inclusion of non-interest lenders into the scheme, the CBN stressed that a commercial enterprise is any farm or agro-based enterprise with agricultural asset (excluding land) of not less than N100 million for an integrated farm with prospects of growing the assets to N250 million within the next three years and N50 million for non-integrated farms/agro-enterprise with prospects of growing the assets to N150 million, except in the case of on-lending to farmers’ cooperative societies.
On how to apply for the loan, the CBN said all applications would be made to the participating banks and shall be treated by participating banks with due diligence.
It noted that loans shall have a maximum tenor that is based on the gestation period of the enterprise/or working capital facility of one year with provision for roll over.
Also, it explained that the scheme allows for moratorium in the loan repayment schedule taking into consideration, the gestation period of the enterprise.
Furthermore, “All projects shall be verified by the CBN after release of fund and drawdown to ensure banks fully comply with the objectives of the scheme. The Development Finance Department of the CBN shall periodically monitor the projects funded under the Scheme, and report to the Committee of Governors.
“Participating banks shall be required to secure written consent of the Central Bank of Nigeria before making any change(s) to the stipulated terms and conditions governing any on-going CACS facility.
“The Scheme shall terminate on September 30, 2025. This exit date does not apply to the tenor of individual loans and overdrafts which are based on their gestation period.”
In addition, “Agricultural credit from the participating banks shall be in the form of loans and interest on CACS facility shall not exceed 9 percent inclusive of all charges to be shared between the participating bank and the CBN: 7 percent and 2 percent respectively.”
Concerning the collateral to be presented by the borrower, the CBN said, “The security which may be offered to a participating bank for the purpose of any loan under the scheme may be one or more of a charge on land in which the borrower holds a legal interest or a right to farm, or a charge on the land including fixed assets, crops or livestock; a charge on the movable property of the borrower; a life insurance policy, a promissory note or other negotiable security; stocks and shares; and any other collateral acceptable to the participating banks.
Adedapo Adesanya