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.
Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration
The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.
The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.
The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.
The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.
There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.
The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.
Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.
The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.
It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.
Foreign Loans Dominate Nigeria’s 2023 Capital Importation, Hits $2.31bn – NBS Report
In 2023, foreign loans dominated Nigeria’s capital importation, according to the latest report from the National Bureau of Statistics (NBS).
The report reveals that out of the total $3.91 billion foreign investment inflow, foreign loans accounted for $2.31 billion, representing 59.1% of the total capital importation.
The NBS data indicates a substantial increase in foreign capital inflow compared to previous quarters.
The final quarter of 2023 saw a notable surge, with foreign capital importation rising from $654.65 million in the third quarter to $1.09 billion.
This surge reflects increased investor confidence and interest in Nigeria’s economic prospects.
However, the dominance of foreign loans in the capital importation landscape raises concerns about Nigeria’s debt profile and sustainability.
While foreign loans can provide crucial funding for development projects and infrastructure, excessive reliance on borrowing poses risks to the country’s fiscal health and economic stability.
It underscores the urgent need for prudent debt management and strategies to diversify funding sources.
The breakdown of the capital importation further reveals that Nigeria received $433.87 million in the first quarter, $771.53 million in the second quarter, $507.71 million in the third quarter, and $594.75 million in the fourth quarter as foreign loans.
The report underscores the importance of addressing structural challenges and creating an enabling environment to attract diverse forms of foreign investment beyond loans.
It emphasizes the need for policies that promote sustainable economic growth, attract foreign direct investment, and reduce reliance on external borrowing.
Nigeria’s Debt May Exceed N107.38tn with New Borrowings
Nigeria faces a looming debt crisis as recent approvals for fresh borrowings could propel the nation’s total debt to surpass N107.38 trillion.
The approval initiated by President Bola Tinubu’s administration includes plans to borrow $7.8 billion and €100 million as part of the Federal Government’s 2022-2024 borrowing strategy.
These funds are earmarked to finance critical sectors such as infrastructure, health, education, agriculture, and security, among others.
Tinubu emphasized the necessity of foreign loans to bridge financial gaps and restore economic stability in light of recent reforms, notably the removal of fuel subsidies.
Furthermore, additional financial support from the African Development Bank and the World Bank, totaling $1 billion and $2 billion respectively, underscores Nigeria’s urgent need for economic revitalization amidst challenging times.
As of September 2023, Nigeria’s total debt stood at N87.91 trillion, comprising N31.98 trillion in external debt and N55.93 trillion in domestic debt.
The recent approvals, if fully implemented, could raise the debt burden by at least 22.15%, reaching the projected N107.38 trillion mark by 2024.
Notably, Nigeria aims to maintain a debt-to-GDP ratio of 40%, yet projections indicate this figure may soar to 53.06%, signaling potential fiscal strain.
The utilization of Ways and Means advances, a provision allowing short-term borrowing from the Central Bank, further complicates the debt landscape.
While the government emphasizes economic reforms and infrastructure development, concerns linger over the sustainability of Nigeria’s borrowing trajectory.
Analysts caution that securing and implementing these loans may prove challenging, as evidenced by delays in previous loan disbursements.
Amidst growing debt burdens, Finance Minister Wale Edun acknowledges the need for fiscal prudence, advocating for reduced reliance on borrowing to stabilize the economy.
As Nigeria navigates its financial landscape, the balance between development aspirations and fiscal sustainability remains a critical challenge.
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