CBN out with Anchor Borrowers’ Programme guidelines

The Central Bank of Nigeria (CBN) on Wednesday came out with the Anchor Borrowers’ Programme (ABP) guidelines and announced the appointment of Deposit Money Banks (DMBs), Microfinance Banks (MfBs) and Development Finance Institutions (DFIs) to disburse N220 billion targeted at ABP.

The CBN also revealed in its website the guidelines for the implementation of ABP which it said was established in line with its developmental function.

The ABP fund, according to CBN, shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) and that loan amount for each farmer shall be arrived at from the economics of production agreed with stakeholders.

CBN states: “Interest rate under the ABP shall be guided by the rate on the N220 billion MSMEDF, which is currently at nine per cent per annum (all inclusive, pre and post disbursement). The Participating Financial Institutions (PFIs) shall access at two per cent from the CBN and lend at a maximum of nine per cent per annum.

“The tenor of loans under the ABP shall be the gestation period of the identified commodities while repayment loans granted to the farmers shall be repaid with the harvested produce that shall be mandatorily delivered to the Anchor at designated collection center in line with the provisions of the agreement signed. The produce to be delivered must cover the loan principal and interest,” it added.

The guidelines also said banks that fail to apply the nine per cent interest charge on the loans shall reverse the excess fees/interest charged and will be issued a warning letter to the and outright ban from participating under other CBN Interventions after two infractions.

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

It said the programme thrust of ABP was the provision of 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.

It said at harvest, the SHF supply his/her produce to the Agro-processor- the Anchor who pays the cash equivalent to the farmer’s account.

The ABP, the CBN added, evolved from the consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, state governors, millers of agricultural produce, and smallholder farmers to boost agricultural production and non-oil exports in the face of unpredictable crude oil prices and its resultant effect on the revenue profile of Nigeria.

“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 utilisation of processors.

“Other objectives include:  Increase banks’ financing to the agricultural sector. It was also meant to reduce agricultural commodity importation and conserve external reserves and increase capacity utilisation of agricultural firms and create new generation of farmers/entrepreneurs,” the CBN said.