The Central Bank of Nigeria (CBN) has said companies, individuals, and agro-processors of agricultural commodities are to access up to a maximum of N2 billion per obligor under the Private sector-led Accelerated Agriculture Development Scheme, P-AADS.
The P-AADS is designed to complement the Accelerated Agriculture Development Scheme (AADS), earlier introduced by the apex bank to engage 370,000 youths in agricultural production, in collaboration with state governments as well as address the food security and youth unemployment challenges across the country.
The CBN on Tuesday, November 10, disclosed this in a statement titled: “Guidelines for the Private Sector-led Accelerated Agriculture Development Scheme,”
The Director, Development Finance Department, Mr. Yusuf Yila, who signed the statement said the scheme shall be funded from the Anchor Borrowers’ Programme (ABP).
The apex bank explained that the maximum loan accessible under the scheme at N2 billion per obligor- and to be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland.
According to the CBN, interest rate under the intervention shall be five per cent per annum (all-inclusive) up to February 28, 2021.
The interest on the facility from March 1, 2021, shall be nine per cent per annum (all-inclusive).
The CBN put the maximum tenor for annual crops at six years with a six months’ moratorium while perennial crops have a maximum tenor of 10 years with a one-year moratorium.
Also the collateral be pledged by participants under the scheme shall be the title of the cleared land and other acceptable collateral prescribed under the ABP.
The CBN explained further that it will bear 50 per cent of the credit risk in the event of default by the participants while the repayment of the facility shall be made on instalment through the participating banks and spread over the EOP of the cultivated commodities.
The participating banks shall remit repayments received to the CBN on a quarterly or annual basis depending on the commodity financed.
The apex bank listed the focal agricultural commodities eligible for consideration under the scheme to include rice, maize, cassava, cotton, wheat, tomato and poultry.
Others include fish, sorghum, oil palm, cocoa, livestock/dairy and any other commodities as may be listed by the CBN from time to time.
On the eligibility criteria, the apex bank stated that prospective P-AADS participants must be existing or new firms engaged in agricultural production with proven capacity and bankable proposal; possess the acceptable title for contiguous lands of not less than 20 hectares; have good credit record and be able to provide collateral for participation.
The beneficiary will also provide evidence of the capacity to cultivate a focal commodity directly or engagement of farmers, including youths as in-growers or out-growers to cultivate on the land after clearing.
The guidelines specified infractions and sanctions against participating parties.
According to the CBN, diversion of funds by the participating banks shall attract a penalty at its maximum lending rate at the time of the infraction.
In addition, such PFI shall be barred from further participation under the scheme.
Also, non-rendition or false returns shall attract the penalty stipulated by BOFIA, while charging interest rate higher than prescribed shall attract the penalty stipulated by BOFIA.
The CBN said any participating bank that fails to disburse the fund within the stipulated days of receipt to the borrower shall be charged penalty interest at the PFI’s maximum lending rate for the period the fund was not disbursed.
The central bank, however, stated that failure to remit repayments received to CBN within the stipulated period shall attract penalty interest at the PFIs maximum lending rate.