Obligors to access N2bn each as CBN releases agric loan guidelines

Uche Usim, Abuja

Farming youths can access up to N2 billion each as the Central Bank of Nigeria (CBN) released new guidelines for the private sector-led accelerated agriculture development scheme on Monday.

The development is part of the apex bank’s development finance programmes aimed at widening platforms through which the real sector, especially the agriculture can access finance and help tackle the food insufficiency imbroglio.

The scheme was introduced to engage 370,000 youth in agricultural production, in collaboration with state governments to address the food security and youth unemployment challenges across the country. The private sector accelerated agriculture development scheme will be funded from the CBN-initiated Anchor Borrowers’ Programme (ABP).

The broad objective of the P-AADS 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. 

The programme seeks to fast track land clearing for primary production of agricultural commodities; promote food security through the provision of large contiguous land for agricultural production across all states; collaborate with agro-processors engaged in backward integration by providing financing for extended land clearing in proximal locations for cultivating commodities for supply of industrial raw materials, support other capable stakeholders interested in unlocking land for agriculture through appropriate financing and engender job creation for individual farmers that will cultivate on the cleared land.

It has a five per cent interest rate per annum (all inclusive) up to 28th February 2021 under the intervention. The interest on the facility will increase to nine per cent per annum from 1st March, 2021.

The loan has a maximum tenor of six years with six months moratorium. While perennial crops have a maximum tenor of 10 years with one-year moratorium.

Title of the cleared land and other acceptable collateral prescribed under the ABP will serve as collateral from the participants under the scheme. 

 “CBN shall bear 50% of the credit risk in the event of default by the participant,” the guideline read in part.