CBN’s Anchor Borrowers’ Programme risks derailing over non-performing loans 

The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, also known as NIRSAL Microfinance Bank Limited, recently issued a final demand notice to agricultural industries that benefited from the Anchor Borrowers’ Programme (ABP) to repay their debts amounting to a total of N5.67 billion.

The action followed the CBN’s directive to the microfinance bank to recover all non-performing intervention loans granted to beneficiaries under the CBN-facilitated Anchor Borrowers’ Programme.

The published list of borrowers with the largest non-performing loans who allegedly defaulted in refunding their loans as agreed include Sadolen Interworld Ltd, with Saidu Audu Adaji and Nura Musa Hassan as promoters, with current exposure of N2.05 billion; Arabic Farms and Commodities Ltd, with Alhaji Yusuf Ibrahim Babangida as promoters and a current exposure of N1.22 billion; Prime Synergy Global Solutions Ltd., with Mercy Ikeji and Jennifer Nyesom-Effiong as promoters and an exposure of N1.45 billion.

Others are Asuj Food Production and Processing Ltd, with Abubakar Umaru Jibrilla as the promoter and an exposure of N581.41m; Souvenire Seeds Nigeria Ltd with Roseline Omokora as the promoter and an exposure of N158.18m; and Con Investment Ltd with Josephine Nwaeze as the promoter with a current exposure of N211.6m.

NIRSAL, in the demand notice issued in Abuja, stated that earlier demand notices have been issued by the bank to the last known addresses of the aforesaid customers who failed to comply, adding that the public notice serves as the final demand notice.

“Following the Central Bank of Nigeria’s (CBN) directive to NIRSAL Microfinance Bank Limited (NMFB) to recover all non-performing intervention loans granted by NMFB under the Anchor Borrowers’ Programme (an intervention Scheme of the CBN), NOTICE is hereby given to the under-listed Customers, to offset their indebtedness to NMFB under the said intervention scheme of the CBN,” NIRSAL said in the demand notice.

“Earlier demand notices have been issued by NMFB to the last known addresses of the aforesaid customers, hence, this public notice serves as the final demand notice,” it said.

The ABP was inaugurated by President Muhammadu Buhari on November 17, 2015, barely six months into his first tenure. The scheme, according to Buhari, was established to create economic linkage between anchor companies involved in the processing of agricultural produce and smallholder farmers of the required agricultural commodities.

The programme, facilitated and coordinated by the CBN, is aimed at increasing banks’ financing to the agricultural sector and enhancing capacity utilisation of farmlands involved in the production of notable commodities. The policy documents of the programme also indicated that the ABP will boost agricultural lending to farmers and entrepreneurs, strengthen the value chain, reduce commodity importation, alleviate poverty among smallholder farmers, increase employment rate and also develop smallholder farmers to grow from subsistence production levels to commercial productivity.

Upon flag-off, the programme got its grant from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) under the auspices of the CBN. Beneficiaries were provided loans at 9 percent interest rate, expected to be repaid based on the gestation period of their commodities which will be mandatorily delivered at designated collection centres.

According to the guidelines of the programme, upon harvest, benefiting farmers are expected to repay their loans with harvested produce (which must cover the loan principal and interest) to an ‘anchor’ who pays the cash equivalent to the farmer’s account.

Despite the ABP’s remarkable objective, and while it has been lauded in several quarters as one of the most successful CBN development finance interventions, the non-recovery of loans worth billions of naira has been described as a clog in the wheel of the programme’s development.

This has led analysts to question the sustainability of the ABP’s framework as the objectives of the scheme appear threatened by failure of the beneficiaries to repay loans amid allegations of corrupt practices in disbursing the loans with several farm association leaders, officials and politicians allegedly siphoning some of the funds for personal use.

Speaking on why many farmers have failed to repay the loans as expected, Isa Wanzam, a rice farmer and loan beneficiary in Kebbi State, said when the funds were being disbursed to many of them (the farmers),  it wasn’t stated clearly to them that it was a loan. He added that they didn’t apply for the loan in the first place and it would be a difficult task for many of the farmers to repay the loan as not all of it was in monetary form because some farmers were offered farm implements which they considered as gifts or farming support aids from the government.

“We wouldn’t have collected anything had they thoroughly sensitised us about the programme,” he stated.

Umar Al-Hassan, another rice farmer, disclosed that the loan was disbursed indiscriminately as the cash was given to those who were neither farmers nor understood what farming entails while the farmers were made to bear the brunt.

Solomon Kyagya, a farmer from Adamawa State, explained that he and some farmers in his community were offered a loan in terms of input after which they were presented with documents from the CBN. Kyagya, however, lamented that the price tags of the inputs  had a discrepancy with that of the market.

“A bag of fertiliser at the market at that time was between N8,000 to N10,000 but the one provided by the ABP was marked as N14,000. Most of the inputs given to us were double the market prices and there is nothing you can do because they gave us the form to sign it, collected our pictures and details,” he said.

Bata Peter-Bwala, a farmer from Maiduguri, Borno State, noted that most farmers in the state were not aware of the procedure to access the loan and get the inputs at the right time.

According to her, many of the farmers who applied for the loans got it at a time the farming system was over, making the inputs ineffective.

The All Farmers Association of Nigeria (AFAN), in a related statement, noted that the credit from the CBN, disbursed through commercial banks and other windows, were not readily available to the real farmers in many cases but were hijacked by some officials who claim to be representatives of the farmers. It added that the banks did not take inhibitors of production such as storage, post-harvest losses, transport risks and others into cognisance in the agricultural lending system.

Towards a more stabilised farmers’ support scheme

As the Anchor Borrowers’ Programme remains perturbed over payback defaults which have adversely affected the smooth operation and expansion of the scheme, agricultural experts have called for a better structured policy implementation that would ensure the programme achieves desired results.

The All Farmers Association of Nigeria suggested that practising farmers should be properly sensitised about the programmes and directly involved in the loan disbursement processes. The association also noted that before initiating the scheme to a group of farmers, the CBN needs to be aware of the production value and risks associated with the particular agricultural commodity.

Abiodun Olaniyi, executive director, Agriquest Africa, an agribusiness management organisation, said that many of the agricultural inputs provided to the farmers by the scheme are crude implements which may likely prove inefficient in the long run.

He explained that many of the farmers lack mechanised tools to bolster production, which resulted in little yields, making it more difficult for the farmers to meet the loan demands.

Olaniyi of Agriquest suggested that the money used in purchasing some ‘out-of-date’ farm inputs can be better utilised in purchasing improved seedlings, mechanised tools and technology-based implements which will be presented to the farming associations and communities to foster improved productivity.

He added that aside from providing these tools, their utilisation should also be properly monitored to ensure they are used for the right purposes.

Agriculture experts have also opined that the programme should be put under the direct supervision of the Federal Ministry of Agriculture and Rural Development (FMARD). This, they said, will help unburden the ‘loads of responsibility’ placed on the CBN which has been struggling to run the programme efficiently.

The Nigeria Agribusiness Group (NABG), in its assessment of the Anchor Borrowers’ Programme, urged the Federal Government to reappraise the programme and make it more sustainable by transferring its control from the CBN to the Federal Ministry of Agriculture and Rural Development (FMARD).

Kabir Ibrahim, chairman, administrative board of the group, who questioned the credibility of the programme, noted that the initiative has been unable to fulfill a lot of gaps while a large percentage of farmers are yet to enjoy its benefits.

Ibrahim also argued that the farmers that  CBN is working with on the Anchor Borrowers’ Programme are largely unknown while the apex bank’s target of 2 million farmers was not realistic being that the farmers in Nigeria are over 14.5 million.

Further justifying the bid to move the programme away from the CBN’s control, Ibrahim asked what would happen to the programme if the next CBN governor does not believe in it.

“We must remember that former CBN governors such as Soludo and Sanusi Lamido Sanusi’s focus was on the banks and other reforms,” Ibrahim said.

“We must learn to institutionalise interventions and relocating the programme to the ministry will ensure this takes place. The relevant people and ministries that have specific mandates must be allowed to execute the tasks that have been placed on their shoulders,” he said.