• Mon. May 29th, 2023

According to IMF, 24% of CBN’s Anchor Borrowers’ Loans Were Repaid

According to the International Monetary Fund (IMF), only 24% of loans disbursed through the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme (ABP) have been repaid.

According to the Washington-based lender’s recent report titled ‘Nigeria selected issues,’ agricultural credit in Nigeria has not significantly increased production, despite the challenge of targeting the right recipients for the credit.

President Muhammadu Buhari launched the ABP in November 2015 to boost agricultural production and reverse Nigeria’s negative food balance of payments.

Smallholder farmers cultivating cereals (rice, maize, wheat, etc.) cotton, roots and tubers, sugarcane, tree crops, legumes, tomato, and livestock are those captured under this initiative.

Loans are disbursed to farmers through Deposit Money Banks (DMBs), Development Finance Institutions (DFIs), and Microfinance Banks (MFBs), all of which are recognized as Participating Financial Institutions by the program (PFIs).

According to the program’s guidelines, farmers repay their loans by taking their harvest to ‘anchors,’ who pay the cash equivalent to the farmer’s account.

The IMF, on the other hand, stated that the poor effect of agricultural credit on production growth could be attributed to difficulties in targeting the right recipients.

It explained that data (November 2020) from the central bank indicate that the repayment rate for the Commercial Agricultural Credit (CAC) Scheme is at almost 66 percent but, since the loans started in 2009, this is not a particularly high outcome.

“For the Anchor Borrowing Program, repayment is also low at 24 percent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.

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“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases (e.g., new agricultural input trading companies to elicit trading rents),” the IMF said.




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