CBN says P-AAD offering N2bn per obligor, accessible to at least 370,000 Nigerians

By Onome Amuge

The Central Bank of Nigeria (CBN) has issued guidelines aimed at engaging and enabling companies, agro-processors of agricultural commodities and individuals to access a maximum of N2 billion per obligor under the private-sector led Accelerated Agriculture Development Scheme (P-AADS).

According to the statement released by the apex bank, the scheme is targeted at facilitating increased sector agricultural production of staple foods and industrial raw materials with the prospects of enhancing food security, job creation and economic diversification to benefit a minimum of 370,000 Nigerians in agricultural production.

Yusuf Philip, director, Development Finance Department of the CBN disclosed that the interest rate as designed by the intervention scheme is 5.0 per cent per annum until February 28, 2021 which would thereafter increase to nine per cent per annum, all inclusive from March 1, 2021.

Philip further disclosed that the collateral for the facility to be pledged by beneficiaries under the scheme will be ‘title of the cleared land’ and other acceptable collateral prescribed under the Anchor Borrowers’ Programme (ABP). He also stressed that the maximum tenor will be six years with six months moratorium while a maximum tenor of ten years with one-year moratorium will be for perennial crops.

Indicating the broad objectives of the scheme, Philip stated, “The specific objectives are to: fast track land clearing for primary production of agricultural commodities, promote food security through the provision of large contiguous land across all states, collaborate with agro-processors engaged in backward integration by providing financing for extended land clearing in proximal locations for cultivating commodities for supply of industrial raw materials, support other capable stakeholders interested in unlocking land for agriculture through appropriate financing as well as enhance job creation for individual farmers on the cleared land.”

The CBN added that the focal agricultural commodities eligible for consideration under the scheme include;rice, cassava, maize, wheat,cotton, poultry, fish, tomato,cocoa,livestock/dairy, oil palm,sorghum and other commodities it consequently approves.

Participants considered eligible for the programme include;  agro-processors of agricultural commodities engaged in backward integration, prime anchors and commodity associations participating under the Anchor Borrowers’ Programme (ABP), with evidence of contiguous land readily available for clearing and cultivation of agricultural commodities; and other companies and individuals with evidence of ownership of contiguous land readily available for clearing and cultivation of agricultural commodities.

The CBN also outlined eligibility criteria for prospective participants which include; proven capacity and bankable proposal, an acceptable/verifiable title for contiguous lands of not less than 20 hectares, satisfactory credit record, provision of  required collateral for participation and  evidence of capacity to cultivate a focal commodity directly or engagement of farmers with the inclusion of youths as in-growers or out-growers to cultivate on the land after clearing.

Highlighting the role of the CBN in the actualisation of the scheme, the CBN director stated that the central bank will provide the fund, act as managing agent, issue and review modalities and operating guidelines when required; provide regulatory and supervisory oversight;monitor, evaluate and conduct impact assessment in conjunction with other stakeholders to ensure consistent periodic reports on the programme.

To ensure the objectives of the scheme are being actualised,Phillip informed that the participating banks would conduct due diligence on prospective participants; access funds from the CBN for on-lending; ensure direct payments to mechanisation service providers for the land clearing; book loans for the successful applicants at the prescribed rate as well as monitor the utilisation of the facility.