The Central Bank of Nigeria (CBN) on Thursday amended the Commercial Agriculture Credit Scheme (CACS) following which it pegged maximum loan intake for any project under the scheme at N2 billion.
It equally pegged the maximum interest rate to the borrower under the scheme shall not exceed nine per cent, inclusive of all charges.
The apex bank also approved the participation of all deposit money banks under the scheme, with all the participating banks required to sponsor projects from any of the target areas indicated in the guidelines and bear all the credit risk of the loans they will be granting.
The CACS is being financed from the proceeds of the N200 billion, three year bond raised by the Debt Management Office (DMO). The fund will be made available to participating bank(s), to finance commercial agricultural enterprises.
“The single obligor for any project from a participating bank under the Scheme shall be N2 billion while for State Governments shall be N1 billion. However, for special schemes and programmes for agricultural development, state governments may be granted concessionary approval for more than N1 billion,” the CBN.
The scheme is expected to help fast track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate; enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
The CBN explained that part of its developmental role, it has in collaboration with the Federal Government of Nigeria, represented by the Federal Ministry of Agriculture and Rural Development (FMARD) established the Commercial Agriculture Credit Scheme for promoting commercial agricultural enterprises in Nigeria, which is a sub–component of the Federal Government of Nigeria Commercial Agriculture Development Programme (CADP).
This fund will complement other special initiatives of the Central Bank of Nigeria in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small scale farmers, Interest Draw-back scheme, Agricultural Credit Support Scheme and other similar developmental initiatives.