- 20 participating banks repay N345.06bn for 587 projects
- Scheme has no positive impact on farmers — Analyst
By Ngozi Amuche
The Central Bank of Nigeria has in the last four months injected a total of N607.87 billion into the commercial agriculture credit scheme.
According to the monthly economic report for April 2019, the apex bank said the funds was for 587 projects, while total amount repaid stood at N345.06 billion.
In addition, a total of N342.7 million was guaranteed to 2,022 farmers under the Agricultural Credit Guarantee Scheme in April 2019, the amount represented an increase of 98 per cent and 22.1 per cent over the respective levels in the preceding month and the corresponding period of 2018.
Similarly, sub-sectoral analysis showed that food crops got the largest share, amounting to N184.7million (53.9per cent) guaranteed to 1,217 beneficiaries, followed by livestock, N48.3million (14.1 per cent) guaranteed to 191 beneficiaries.
The sum of N42.6 million (12.4 per cent) was guaranteed to mixed crops sub sector, in favour of 329 beneficiaries. Cash crops, fisheries and others, received N29.8 million (8.7per cent), N26.5 million (7.7percent) and N10.8 million (3.2 per cent), guaranteed to 189, 55, and 38 beneficiaries.
Analysis by State however, showed that 25 states and the Federal Capital Territory benefited from the Scheme in April 2019, with the highest and lowest sums of N46.6 million (13.6 per cent) andN0.6 million (0.2 per cent) guaranteed to Ogun and Kogi states, respectively.
Further analysis of the disbursement also showed that the total amount released by the CBN under the Commercial Agriculture Credit Scheme to participating banks amounted to N607.87billion for 587projects, while total amount repaid stood atN345.06billion.
Participating banks
The apex bank’s statistics showed that as at the end of April 2019, N607.87 billion was disbursed for the projects through 20 Deposit Money Banks.
A detailed analysis of the figure showed that the highest amount of N122.66 billion was disbursed through Zenith Bank Plc, to repay N73.23billion.This was followed by United Bank for Africa Plc, with N83.06 billion to repay N51.52billion; while Sterling Bank Plc, First Bank of Nigeria Plc, and GTBank Plc had N72.17billion, to repay N26.68billion and N52.52 billion for N36.19 respectively.
Similarly, the sum of N39.85billion was channeled through GTBank to repay N20.26billion;while Access Bank received N36.66billion to repay N29.64billion; Keystone,N30.05 billion to repay N4.01billion; Union Bank Plc received N28.91 billion to repay N19.62billion; Stanbic Bank also got N28.10billion for N19.19billion,among others.
Economic observers react
Analysts who spoke with our correspondent said in all these disbursements, the scheme has not made any positive impact on farmers, stressing that a better living conditions for the recipients could only come through good governance.
The Executive Vice Chairman, Alpha African Advisory, Mustafa Chike-Obi, said; all these intervention funds, don’t work. “And let me tell you why they don’t work. If you lend to a farmer at five per cent, you think you are helping him but everything around him is at 26 per cent. So, he gets a little bit of relief on his financing, but he doesn’t get reliefs on his supplies, diesel, food, employees, so at the end of the day, those things he gets at 26 per cent invade his five per cent,”
Chike-Obi said intervention funds also don’t work because the default rates are as high as default rates of non-intervention funds. “So, they don’t work. They are not very efficient”.
An economist, Mr. Gregory Shimar, said the CBN should ensure that its interventions reach the smallholders, who are in a worse situation, adding that the recent intervention through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending which is part of the CBN intervention has been bolder and better targeted. “It is difficult to say the same has happened over the years”
Shimar said: a journey around the hinterland and villages will show that poverty among farmers is higher, adding that the Government needs to step up their game in ensuring that the intervention is evenly disbursed.
An asset management analyst, Mr. Olagoke Olubunmi, said that the Fund had helped in some ways in tackling the scourge of non-access to finance among agro-preneurs in Nigeria, and that the challenges however, suggested that a lot more work needs to be done to reposition the Fund in the right direction for agricultural development.
He noted that the focus of the present government is to reposition the country, to diversify it from its reliability on oil to non-oil, adding that it will definitely have a positive impact on the growth of the economy.
Apex Bank’s perspective
The Chairman, Agricultural Credit Guarantee Scheme Fund, Mrs. Olubunmi Siyanbola, said there is the need to increase the credit guarantee to small-scale farmers through its ACGEF Scheme.
Siyanbola who spoke with financial journalists, recently in Lagos, said the scheme, which offered credit guarantee for risks by giving loans to small farmers, presently at N100, 000, was too low, saying that there was the need to review the intervention upward.
“It is crucial for us to do all that it takes, to take care of those that actually contribute to the growth of the agricultural sector, towards its huge contribution to economic development, and these are the peasant farmers. It is also very important for us to enable them to access finance so that they could do more to ensure food stability in the country,” she said.
According to her, the Fund has been in existence for 40 years and continues to gain attention as evidenced by the increasing ongoing debate over its relevance due to the declining traction among banks.
“More importantly, there have been attempts to review the main contextual issues in the operability of the fund in the 21st century, but these attempts have been delayed by the non-constitution of the board until 2018, since its dissolution in 2007, by the Federal Government.
“For instance, the maximum loan amount guaranteed under the Fund for the different categories of farmers, that is, individual, corporate bodies and cooperative societies, respectively, has lost value, due to the rising costs of goods and services, coupled with the dynamics of the macroeconomic situation of the economy.” Siyanbola said.
The Point findings revealed that the youth empowerment development programme is yet another CBN intervention in the economy “to assist in job creation and the development of entrepreneurial skills among Nigerian graduates.”
The scheme was established to improve access to finance by youths to develop their entrepreneurial skills using a well-structured business models; stimulate job creation through the development of small and medium enterprises among Nigerian youths; harness the entrepreneurial capacity of Nigerian youths; and increase the contribution of non-oil sector to the nation’s GDP.
“The collateral required here are the NYSC certificate, Tertiary Institutions Certification and 3rd party Guarantors. Registration of collaterals (movables)and financed equipment with the national collateral registry,” CBN stated.
Notably, the various CBN interventions have funded the industrial sectors to a large extent with affordable long term finances as well as created jobs. The CBN has been involved in development financing since 1962. Policies affected were focused on improving access to credit by preferred sectors including; agriculture manufacturing, MSMEs, and infrastructure as well as the establishment and strengthening of development finance institutions.
Benefit of the funds
The fund is made available to participating banks to finance commercial agricultural enterprises at a maximum interest rate of nine per cent. It was set up to fast-track the development of the agricultural sector of the Nigerian economy, by providing credit facilities to commercial agricultural enterprises at a single digit interest rate.
