CBN to Punish Violators of Anchor Borrowers’ Scheme

• CBN to Punish Violators of Anchor Borrowers’ Scheme

The Central Bank of Nigeria (CBN) yesterday issued guidelines for the implementation of its Anchor Borrowers’ Programme (ABP), listing far-reaching sanctions for any violations by all stakeholders.

The ABP, a brainchild of the apex bank was launched by President Muhammadu Buhari on November 17, 2015 to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.

The thrust of the scheme is to provide 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.

Essentially, the broad objective of the ABP 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 among others.

However, the new guidelines, posted on the CBN website detailed sanctions for any attempt by stakeholders including Participating Financial Institutions (PFIs); Anchor; Small Holder Farmers (SHF) and Project Monitoring Team (PMT) to undermine the objective of the programme.

Specifically, any PFI involved in the diversion of funds to unauthorised activities would cause the amount diverted to be recovered by the CBN while a penalty charge at the maximum lending rate of the PFI on the amount diverted would apply. Such PFI also faces outright ban from participating under other CBN Interventions following another infraction.

In addition, any PFI found to be charging un-authorized fees/interest run the risk of reversal of the charged fees/interest and issuance of warning letter to the PFI including outright ban from participating under other CBN Interventions after two infractions.

The failure of PFIs to disburse funds within specified period to the borrowers would also attract penalty charge at the maximum lending rate of the PFI and recovery of the undisbursed amount plus interest. Furthermore, an Anchor which fails to collect certified quality output from farmers after going into agreement as the Anchor to the farmers will cease to participate under the programme and would not be allowed to access agricultural and other CBN interventions.

Also, failure to pay for collected commodities within the specified period will have the Anchor bear the cost of accrued interest on the farmers’ account from the due date. Nevertheless, any Small Holder Farmers (SHF) engaged in Side-selling faces total prohibition from all CBN interventions as well as blacklisting of the SHF on any intervention by the CBN among other punitive measures detailed by the guideline.