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The agricultural policy of the Central Bank of Nigeria (CBN) got the needed boost recently when the apex bank unveiled guidelines for the operation of yet another milestone to be driven by the Private Sector-led Accelerated Agricultural Development Scheme (P-AADS). The thrust of the policy 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.
According to the CBN, the new programme has been strategically designed to complement the Accelerated Agriculture Development Scheme (AADS) that will engage about 370,000 youths in agricultural production. The bank will execute the project in collaboration with state governments to reduce youth unemployment across the country, as well as explore private sector partnership that will facilitate rapid land clearing for the production of key agricultural commodities.
It is cheering that the intervention has come at this crucial time when statistics from the Food and Agriculture Organisation (FAO) revealed that 9.8 million Nigerians, in over 16 states of the federation and the Federal Capital Territory (FCT), are suffering from hunger, and nearly 14 million projected to go hungry next year. Coming on the heels of the Anchor Borrowers Programme (ABP), the initiative will undoubtedly go a long way to contain hunger and poverty. It will also check unemployment, especially among the youths who make up about 60 per cent of the population and boost the nation’s revenue.
With 23.92 per cent of Nigeria’s nominal Gross Domestic Product (GDP) recorded in the Q2, 2020, agriculture currently presents the major opportunity for long-term sustainable development in the country. The sector has proved to possess the potential to generate huge revenue and create jobs. It is commendable that the CBN has rolled out the guidelines and criteria necessary for the scheme to succeed. According to the guidelines, signed by Mr. Yusuf Philip Yila, Director Development Finance Department of CBN, the scheme will be funded from the Anchor Borrowers Programme.
On the loan and conditions, the apex bank has pegged the maximum loan accessible under the scheme at N2 billion per participant. This will be repaid from the Economics of Production (EoP) for cultivating on the cleared farmland. The interest under the intervention fund is five per cent per annum (all-inclusive) up to end of February 2021. However, interest on the loan from March 1, 2021 will be nine per cent. We believe that this is a fair deal that requires good faith and transparency on all parties involved. Besides, the guidelines put the minimum tenor for annual crops at six years with a six months’ moratorium, while perennial crops have a maximum tenor of 10 years with one-year moratorium.
It is also heartening that the guidelines stipulate that the CBN will bear 50 per cent of the credit risk in the event of default by the participants while the repayment of the facility can be done in instalments through the participating banks and spread over the EoP of the cultivated commodities. In addition, participating banks are required to account for repayments received, to the CBN on a quarterly or annual basis, depending on the commodity they have financed. It is good that the participating banks have been warned against diverting the intervention funds meant for the agro-processors and others. The warning is timely, because sometimes lofty government programmes failed to achieve target objectives due to diversion or misappropriation of funds budgeted for the scheme.
Such infractions should not be allowed to scupper the success of the P-AADS. In the same vein, the eligibility criteria should not be sabotaged. According to the CBN, diversion of funds by the participating banks will attract a penalty at its maximum lending rate at the time of the infraction. Besides, such banks will be barred from further participation in the scheme. According to the guidelines, participants must be established or new firms engaged in agricultural production with proven capacity and bankable proposals, and should possess the acceptable title for contiguous lands of not less than 20 hectares readily available for clearing and cultivation of agricultural commodities.
This is in addition to good credit record that can go for collateral for participation. In all, we call for a seamless implementation of the scheme. It is sad that some of the past economic measures to boost agriculture and revive the economy did not achieve much. However, the good news is that the CBN under the leadership of Godwin Emefiele has initiated policies to revamp the sector. Therefore, all hands must be on deck to ensure that the scheme succeeds.
