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.