Looking for a low-interest rate loan to boost your agricultural business in Nigeria? Learn more about the CBN Loan for Agricultural Credit Guarantee Scheme Fund 2023/2024 and how to apply in this informative article. Discover the eligibility criteria, required documents, and benefits of the loan, as well as FAQs and tips for successful repayment.
Don’t miss out on this opportunity to enhance your productivity, ensure food security, and create job opportunities in the agricultural sector. Apply now!
CBN Agricultural Credit Scheme: The ACGSF was established by Decree No. 20 of 1977, and started operations in April, 1978. Its original share capital and paid-up capital were N100 million and N85.6 million, respectively. The Federal Government holds 60% and the Central Bank of Nigeria, 40% of the shares. The capital base of the Scheme was increased to N3 billion in March, 2001. The Fund guarantees credit facilities extended to farmers by banks up to 75% of the amount in default net of any security realized. The Fund is managed by the Central Bank of Nigeria, which handles the day-to-day operations of the Scheme. The Guidelines stipulate the eligible enterprises for which guarantees could be issued under the Scheme.
Between 1978 and 1989 when the government stipulated lending quotas for banks under the Scheme, there was consistent increase in the lending portfolios of banks to agriculture, but after the deregulation of the financial system, banks started shying away by reducing their loans to the sector due to the perceived risk. In order to reverse the declining trend several innovations and products were introduced under the Scheme such as:
- the Self-Help Group Linkage Banking,
- Trust Fund Model and
- Interest Draw Back .
Application forms under the Scheme are obtainable from various branches of participating banks throughout the country. The various forms normally completed in the operation of the Scheme by banks can be downloaded from the list below:
- Application for credit facilities
- Application for Guarantee
- Application for Enhancement
- Application for Extension
- Notice of Default
- Guarantee Claims; and
- Annual Returns
Agricultural Credit Support Scheme (ACSS)
The ACSS is an initiative of the Federal Government and the Central Bank of Nigeria with the active support and participation of the Bankers Committee. The Scheme has a prescribed fund of N50.0billion. ACSS was introduced to enable farmers exploit the untapped potentials of Nigeria’s agricultural sector, reduce inflation, lower the cost of agricultural production (i. e. food items), generate surplus for export, increase Nigeria’s foreign earnings as well as diversify its revenue base. At national level, the scheme operates through a Central Implementation Committee (CIC) while at the Federal Capital Territory (FCT) and State levels, the Scheme operates through State Implementation Committees (SICs) instituted to ensure that the objectives of the scheme is realized without hindrance.
To access loans under ACSS, applicants (practicing farmers and agro-allied entrepreneurs with means) are encouraged to approach their banks for loan through the respective state chapters of farmers associations and State Implementation Committees. However, large scale farmers are allowed under the scheme to apply directly to the banks in accordance with the guidelines.
ACSS funds are disbursed to farmers and agro-allied entrepreneurs at a single-digit interest rate of 8.0 percent. At the commencement of the project support, banks will grant loans to qualified applicants at 14.0 per cent interest rate. Applicants who pay back their facilities on schedule are to enjoy a rebate of 6.0 per cent, thus reducing the effective rate of interest to be paid by farmers to 8.0 per cent.
The Implementation Guidelines will be determined administratively as soon as a decision is taken on the proposed fund.
Commercial Agriculture Credit Scheme (CACS)
As part of its developmental role, the Central Bank of Nigeria (CBN) in collaboration with the Federal Ministry of Agriculture and Water Resources (FMA&WR) established the Commercial Agriculture Credit Scheme (CACS) in 2009 to provide finance for the country’s agricultural value chain (production, processing, storage and marketing). Increased production arising from the intervention would moderate inflationary pressures and assist the Bank to achieve its goal of price stability in the country. The primary objectives of the Scheme are to:
- Fast-track the development of the agricultural sector of the Nigerian economy by providing credit facilities to large-scale commercial farmers at a single digit interest rate;
- Enhance national food security by increasing food supply and effecting lower agricultural produce and products prices, thereby promoting low food inflation;
- Reduce the cost of credit in agricultural production to enable farmers exploit the untapped potentials of the sector; and
Increase output, generate employment, diversify Nigerians revenue base, raise the level of foreign exchange earnings and provide input for manufacturing and processing on a sustainable basis.
The Scheme which is a sub component of the Federal Government of Nigerians Commercial Agriculture Development Programme (CADP) is financed through a N200billion Bond raised by the Debt Management Office (DMO). Loans to eligible entities under the Scheme are disbursed at a maximum interest of 9 percent. The subsidy arising from this stipulated rate and the market rate on all loans granted, and the administrative expenses of the Scheme are borne by the Central Bank of Nigeria (CBN).
The Central Bank of Nigeria and the Federal Ministry of Agriculture and Waters Resources jointly ensure that the scheme is implemented successfully. This is achieved through the Project Steering Committee (PSC) comprising the Honourable Minister of Agriculture and Water Resources (Chairman), the Governor of the Central Bank of Nigeria, Representatives of the Federal Ministry of Finance and Commercial Farmers, respectively and the Programme Coordinator of the Commercial Agriculture Development Programme. The day-to-day implementation of the Scheme is undertaken by a Technical Implementation Committee (TIC) made up of the Director of Development Finance Department, CBN as the Chairman, Head of Agricultural Credit Support Division, CBN and a Consulting Group as members, and the Programme Coordinator of the Commercial Agriculture Development Programme of the Federal Government as the Secretary.
CACS is operated in two tranches of N100billion each. The 1st Phase of the tranche ran from May to December, 2023, while the 2nd tranche commenced in February, 2024.
Detailed information on the operational modalities for the CACS are shown on the Guidelines for Commercial Agricultural Credit Scheme while the performance of the Scheme are indicated in the Monthly Report.