Despite Majority’s Refusal To Pay Back, CBN Loans to Farmers Hikes to N1 Trillion
The Central Bank of Nigeria (CBN) has revealed that a sum of N1 trillion in loans has been disbursed to farmers across the country as of April despite the refusal of most beneficiaries to pay back.
Recall that Investors King reported CBN’s outcry over a majority of the farmers who benefited from the Anchor Borrower’s Programme (ABP), but refused to pay back.
Investors King gathered that the majority of the beneficiaries regard the loan as their part of the national cake and they do not have to pay back what they consider theirs as citizens. This attitude made it difficult for other farmers, who also want to access the loan, to benefit from the scheme.
According to figures gathered from the CBN’s Monetary Policy Committee members’ report, “Between January and February 2022, the bank disbursed N29.67bn under the Anchor Borrowers’ Programme for the procurement of inputs and cultivation of maize, rice, and wheat, three crops that hitherto were significant concerns of FX demand.
“These disbursements bring the total under the programme to over 4.52 million smallholder farmers, cultivating 21 commodities across the country, comes to a total of N975.61bn.”
The CBN stated in its most recent MPC report, “Between April and May 2022, the Bank released the sum of N57.91bn under the Anchor Borrowers’ Programme to 185,972 new projects for the cultivation of rice, wheat, and maize, bringing the cumulative disbursement under the programme to N1.01tn, disbursed to over 4.2 million smallholder farmers cultivating 21 commodities across the country.”
In its amended Anchor Borrowers’ Programme Guidelines for September 2021, the CBN’s Development Finance Department stated that insurance coverage should be given under the plan.
According to the instructions “Provide insurance cover for the projects; ensure fast processing and settlement of claims; provide technical advice to farmers on insurance policies; and monitor projects for early warning signals or red flags.
“Render periodic reports on-farm conditions; serve as member of the project management team; and carry out any other responsibilities as may be prescribed by the CBN from time to time.”
The updated rules took into account current realities and advancements in the ABP, with the goal of fostering best practices in program execution.
Smallholder farmers, the ABP transaction dynamics, and the project management team in the implementation phase were all recognized in the publication.
The recommendations, according to the CBN, are aimed at strengthening the program’s implementation process and increasing stakeholder participation in order to achieve the ABP’s goal.
CBN Disagrees With IMF’s Poor Rating of Anchor Borrowers’ Programme, Says Over 50% Loan Repaid
The Central Bank of Nigeria (CBN) has reacted to the recent poor rating of the International Monetary Fund (IMF) on the Anchor Borrowers’ Programme, faulting its claim.
The CBN stated that as of February 2023, 52.39 percent of the loan which amounts to N503bn has been repaid by the beneficiaries of the programme. This contradicts the IMF’s statement.
Investors King had earlier reported that the International Monetary Fund said only 24 percent of loans offered to farmers under the Anchor Borrowers’ Programme of the CBN have been repaid.
The IMF mentioned that the repayment process is very low and the programme structure weak as CBN allows the farmers to pay in cash or in kind.
The international body further alleged that the beneficiaries were not carefully selected as some used the funds for other purposes instead of agriculture.
In a statement by the Acting Director, Corporate Communications Department, AbdulMumin Isa, on Monday, the apex bank stated that out of the N1.079 trillion disbursed for the programme, N960 billion was due for repayment.
Isa further said that about 4.45 million smallholder farmers had been beneficiaries of the ABP for planting 21 different crops on 6.02 million hectares.
He said, according to the Food and Agriculture Organisation, the ABP has immensely aided the national output of focal commodities, with maize and rice peaking at 12.2 million metric tonnes in 2021 and 9.0 million metric tonnes in 2022.
“It is pertinent to note that the tenor of loans under the ABP is based on the commodity gestation period. For instance, loans granted to farmers cultivating some perennial crops could have up to seven-year tenor.
“The Central Bank of Nigeria remains committed to its developmental mandate of stimulating access to finance for the real sector, particularly agriculture, as it continues to support the Federal Government’s drive for food security and economic growth. Accordingly, the Central Bank of Nigeria continues to welcome applications from eligible Nigerian farmers and firms under the Anchor Borrowers’ Programme,” the acting Spokesperson stated.
CBN Agricultural Loans Haven’t Grown Nigerian Economy, Only 24% Repaid– IMF
The International Monetary Fund (IMF) says agricultural loans offered have not significantly improved production and the Nigerian economy.
This is as the IMF revealed that only 24 percent of loans distributed under the Anchor Borrowers’ Programme of the Central Bank of Nigeria (CBN) have been repaid as at January 12, 2023.
The Anchor Borrowers’ Programme (ABP), formed in 2016 is aimed at assisting farmers to improve the quality of their agricultural inputs for massive production to reach international standards and boost the economy, Investors King had learnt.
In a Selected Issues paper as a document for the periodic consultation with Nigeria, IMF pointed out that CBN has not been able to identify the right recipients of the loans which has affected the result and hindered production growth.
Investors King reports that the Anchor Borrowers Programme, from inception, had prepared N40bn loans to support farmers with a single-digit interest rate.
The IMF hinted that over 1 trillion naira has been disbursed as loans through mid-2022 for the ABP scheme even as the CBN increased its share of agricultural financing.
According to the IMF, the repayment of the loans disbursed is too low despite the fact that the CBN allows the beneficiaries to pay in kind or cash.
The international body described the loan repayment structure as too weak which has led to the unimpressive outcome of the ABP scheme.
The document reads partly, “For the Anchor Borrowing Programme, repayment is also low at 24 per cent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.
“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 All Farmers Association of Nigeria (AFAN), December last year stated that a larger number of the loan recipients are not Nigerian Farmers which has made them difficult to trace for repayment as they are not captured in their database. Though, the CBN disagreed with the claim.
FMBN Records Over 17,000 Beneficiaries of Housing Loans in 2022
Not fewer than 17,886 workers have benefitted from the National Housing Fund (NHF) in 2022, says the Federal Mortgage Bank of Nigeria (FMBN).
Investors King understands that the NHF Scheme was established by the Federal Government to enable Nigerian workers with low or medium income access loans to build or buy houses for residential purposes.
FMBN stated that funds were given to assist active workers who are contributors in the NHF Scheme to build or renovate their existing houses.
Investors King reports that complaints over the years on the scheme showed that the FMBN has not not been fulfilling its core purpose of furnishing workers with modern and affordable houses.
The Group Head of Corporate Communications, Timan Elayo averred that several workers have benefitted from the housing loans with a low-interest rate and long repayment period of up to 30 years.
Elayo gave the breakdown of the various programmes beneficiaries; “948 subscribers got access to the NHF mortgage loan which allows the contributor to purchase a house through a licensed mortgage loan originator at the maximum loan amount of N15 million, at an interest rate of six per cent and the repayment period of up to 30 years.
“1,034 contributors under the rent-to-own arrangement got an FMBN-funded house as a tenant until rental he/she pays qualifies for ownership of the house with a maximum purchase price of N15 million and interest rate is seven per cent of the price of the property on an annuity basis for 30 years.
“Also, 15,836 contributors got home renovation loans, a product that affords Nigerians an opportunity to access mortgage loans for the renovation or improvement of existing homes. While only 68 subscribers got access to the NHF individual construction loan.”
The FMBN Boss noted that the mortgage bank is making plans to diversify its income to get more funds to satisfy more workers.
He mentioned that the bank is planning to implement a five-year strategic blueprint to improve its funds, get long-term capital to fund its programmes and boost the recapitalisation agenda of the bank.
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