CBN responds to critics of Agriculture Credit Scheme

Perhaps in response to criticism, that its Commercial Agriculture Credit Scheme (CACS) had been a failure, the Central Bank of Nigeria (CBN) has released an evaluation and impact assessment report of the scheme.

CBN Governor Godwin Emefiele had during the CFA Nigeria Investment Conference held last week hit out at critics of the programme.

“We have empowered 800,000 people in our rural communities. We have disbursed over N100 billion on this project. That is why it is painful when people say that it hasn’t worked. We are importing rice. It’s very discouraging. That’s why I say. If you can’t join us in this message, just keep quiet and let us continue on our journey.”

Highlights of the report  

  • Since inception till December 2016, the sum of N407.362 billion has been released to 487 projects (436 valued at N327.362 billion to private projects while 51 valued at N80.0 billion to State Government Projects).
  • The total releases from the CACS Receivables Account remained at N199.831 billion. Initial capital.
  • The cumulative fund repaid by banks into the Repayment Account stood at 225.009 billion in respect of 445 CACS projects.
  •  109 projects had been fully repaid at end of December 2016.
  • Total releases from the CACS repayment account stood at N207.531 billion.
  • 80.2% of the funds were applied to agriculture and agriculture-related activities, by 82.7% of the firms.
  • 19.8% (N29.2 billion) of the funds may have been applied in the areas not intended under the Scheme by 33 or 17.3% of the beneficiaries.
  • Nine of the 36 states recorded zero participation in the scheme. The report, however, noted that this could be due to the fact some firms used addresses different from their head offices to apply for the CACS loan thereby distorting the true distribution of access by location.
  •  In terms of the number of participating firms, Oyo, Kano, Kaduna, Lagos, Edo and Kwara states lead.  seven (7) of the 36 states each received above 5% of the total funds disbursed

The Central Bank of Nigeria established the CACS in collaboration with the Federal Ministry of Agriculture and Water Resources in 2009.

The scheme is a sub-component of the Federal Government of Nigeria’s Commercial Agriculture Development Programme (CADP) and was financed from the proceeds of the N200 Billion 7 year bond raised by the Debt Management Office.

The fund is made available to participating banks to finance commercial agricultural enterprises at a maximum interest rate of 9 per cent.

In addition, each State Government could borrow up to N1.0 Billion for on-lending to farmers’ cooperative societies and other areas of agricultural development provided such initiatives/interventions are in line with the objectives of CACS.

Loans are applicable to the entire agricultural value chain (production, processing, storage and marketing).

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