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Jude Chinedu, Enugu
The Central Bank of Nigeria is partnering with deposit money banks and micro finance banks to boost its Agricultural Credit Guarantee Scheme (ACGS) in Enugu State.
Speaking during a meeting organised with banks on Thursday, the branch controller, CBN, Enugu, Mr Chiedozie Emmanuel Okonjo, said apex bank its effort to increase the flow of credit to agricultural sector established the Agricultural Credit Guarantee Scheme Fund (ACGSF) in 1978.
He noted that the initiative was to induce banks to increase lending to the sector by reducing the challenges faced by farmers in accessing credit for their activities through de-risk ing exposure of participating banks.
He said it was also to encourage banks to shore up lending to the sector through the provision of a guarantee cover to loans given by banks for agricultural purposes.
He further said that, “the scheme guarantees offerings of 75 per cent of the amount in default to the lending financial institutions as an incentive. The borrowers are also entitled to interest drawback of 40per cent of the total accrued interest paid.”
He expressed worry that despite incentives made available through the scheme, “researches over the years showed that banking sector lending to Agriculture remained below 5per cent of the total lending in the country.
“A closer examination of the statistics of the operations of the Scheme revealed a worrisome decline in the participation of Deposit Money Banks under the Scheme. Microfinance Banks (MFBs) remain the most active participating institutions.
“We therefore implore you to use this event to further understand the dynamics of the Scheme with the aim of increasing your participation so as to enable the country attain the desired level of food security envisioned by our founding fathers.
Umuchinemere, Lapo and Kenechukwu microfinance banks received CBN’s award of excellence for the high number of loans they disbursed to famers through the scheme in 2019.
