The Central Bank of Nigeria (CBN) has today unveiled a revised Anchor Borrowers Programme (CBN) that among various measures provided for an equal sharing of credit risk and stiffer penalties for various offences.
The disclosure is contained in a recent circular issued by the department of development finance of the Central Bank of Nigeria, as seen by naijabusiness.com.ng
According to the notice, repayment of loans under the revised ABP guidelines shall be by produce and/or cash as may be prescribed by the CBN. In addition, the CBN shall bear 50 per cent credit risk after satisfactory evidence that every means of loan recovery has been exhausted by the Participating Financial Institutions (PFI).
The Central Bank of Nigeria specified that the targeted beneficiaries of the revised ABP shall be smallholder farmers and medium to large scale farmers engaged in the production of agricultural commodities across the country. The smallholder farmers are expected to be in groups, cooperative(s), and associations or under out-grower arrangement.
Meanwhile, the targeted agricultural commodities captured in the revised ABP include; Cereals, cotton, roots and tubers, sugarcane, tree crops, legumes, tomato, livestock and any other commodity that may be decided upon by the Bank from time to time.
Eligible participating financial institutions (PFIs) include; deposit money banks, development finance institutions, non-interest banks and microfinance banks.
Furthermore, the apex bank revealed that the maximum loan limit for each eligible farmer under the programme, shall be decided based on CBN ratified Economics of Production (EOP) and validated land size.
The programme shall be administered at the prevailing interest rate for intervention funds as prescribed by the CBN from time to time. On the other hand, tenor of loans under the programme shall be based on the gestation period of the targeted commodity.
How do I maximize this opportunity as a smallholder farmer?
To maximize the opportunities inherent in this programme, a prospective or active smallholder farmer is expected to;
i. Be a member of a farmer group;
ii. Have a bank account with the PFI;
iii. Provide a valid Bank Verification Number (BVN);
iv. Not be a defaulting borrower;
v. Have a validated farmland;
vi. Provide 10 per cent minimum equity contribution;
vii. Not participate under multiple associations in one cropping season.