Economy

Banks to Give N2bn Agric Loans at 5% Annual Interest-CBN

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The Central Bank of Nigeria (CBN), has authorised commercial banks nationwide to give out loans to youths interested in going into the business of agriculture.

The loan, which stems from the Accelerated Agriculture Development Scheme (AADS) was put in place by the apex bank in alliance with state governments to engage about 370,000 youth in agricultural production.

Yusuf Yila Philip, CBN Director, Development Finance Department on Tuesday, disclosed the loan guidelines which states that the maximum loan accessible under the scheme shall be N2 billion per obligor and attracts an interest rate of five per cent yearly.

Mr. Philip affirmed that about 75 per cent of the country’s population falls within the age bracket of (0-35 years), noting that a larger percentage of this population would have fared on their own if adequate opportunities were being made available in the field of agriculture.

He also highlighted various agricultural commodities that are eligible for consideration under the loan scheme and they include; rice, maize, cassava, cotton, wheat, tomato, poultry and fish, among others.

Mr. Philip stressed that prospective applicants must have made provision of a contiguous land of about 20 hectares set aside for specified agricultural commodities cultivation, buttressing also that, there should be an evidence of land ownership in any form of acceptable title, which includes lease of a minimum of 15 years.

It was made known that the Apex Bank, will bear 50 per cent of the credit risk in case there is a breach of agreement by the participant, while repayment of the facility will be paid periodically through the participating banks and spread over the Economics of Production (EOP) of the cultivated commodities.

However, participating banks are to carry out a thorough inspection on prospective obligors, access funds from the CBN for lending. They must also ensure that due payments are made directly to mechanized service providers for land clearing.

In a bid to bring about more rapid land clearing for production of agricultural commodities, a Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS) was also launched to complement the AADS by exploring private sector partnership.

The core objective of P-AADS is to bring about increase in the private sector participation especially in the agricultural production of staple foods and industrial raw materials, and also to support food security, enable job creation and economic diversification.

Read Also: Tomatoes: Policy for an Agrobusiness

According to the loan guidelines which reads in parts, ‘Interest rate under the intervention shall be five percent per annum (all inclusive) up to 28th February 2021. Interest on the facility from 1st March 2021 shall be nine percent per annum (all inclusive).’

Another necessary requirement stipulated to be pledged under the loan scheme, is the title of the cleared land and other acceptable collateral prescribed under the Anchor Borrowers Programme.

The CBN, in fulfilling it developmental mandate, keeps developing and introducing development finance programmes and schemes to promote ample access to finance which will advance critical sectors of the economy so as to achieve a boost in the food production and diversification of the economy.

Nike Omosanya

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Categories: Economy

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