Central Bank of Nigeria Ordered N220b Disbursed for Anchor Borrowers’ Programme.
Central Bank of Nigeria Ordered N220b Disbursed for Anchor Borrowers’ Programme
The Central Bank of Nigeria (CBN) ordered Deposit Money Banks (DMBs), Microfinance Banks (MfBs) and Development Finance Institutions (DFIs) to disburse N220 billion targeted at the Anchor Borrowers’ Programme (ABP).
The apex bank also issued guidelines for the implementation of Anchor Borrowers’ Programme, established in line with its developmental function.
The CBN said the Anchor Borrowers’ Programme fund shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF). Loan amount for each farmer shall be arrived at from the economics of production agreed with stakeholders.
Anchor Borrowers’ Programme Interest Rate
“Interest rate under the Anchor Borrowers’ Programme shall be guided by the rate on the N220 billion MSMEDF, which is currently at nine per cent per annum (all inclusive, pre and post disbursement).
The Participating Financial Institutions (PFIs) shall access at two per cent from the CBN and lend at a maximum of nine per cent per annum,” it said.
CBN to be Strict on Interest Rate
The guidelines also said banks that fail to apply the nine per cent interest charge on the loans shall reverse the excess fees/interest charged and will be issued a warning letter to the and outright ban from participating under other CBN Interventions after two infractions.
“The tenor of loans under the Anchor Borrowers’ Programme shall be the gestation period of the identified commodities while repayment loans granted to the farmers shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at designated collection center in line with the provisions of the agreement signed. The produce to be delivered must cover the loan principal and interest,” it added.
Reason for Anchor Borrowers’ Programme
The Anchor Borrowers’ Programme was launched by President Buhari in November 2015. The intention was to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.
The programme thrust of Anchor Borrowers’ Programme was the provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food.
It said at harvest, the SHF supply his/her produce to the Agro-processor- the Anchor who pays the cash equivalent to the farmer’s account.
The Borrowers’ Programme, the CBN added, evolved from the consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, state governors, millers of agricultural produce, and smallholder farmers to boost agricultural production and non-oil exports in the face of unpredictable crude oil prices and its resultant effect on the revenue profile of Nigeria.
Main Objective of Anchor Borrowers’ Programme
The broad objective of the programme is to create economic linkage between smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization of processors.
Other Objectives of Anchor Borrowers’ Programme
- Increase banks’ financing to the agricultural sector
- Reduce agricultural commodity importation and thereby conserve external reserves
- Increase capacity utilization of agricultural firms and create new generation of farmers/entrepreneurs