The Central Bank of Nigeria (CBN) has disclosed that companies, individuals and agro-processors of agricultural commodities will be able to access up to a maximum of N2 billion per obligor under the Private sector-led Accelerated Agriculture Development Scheme, P-AADS.
Making the disclosure in the guidelines for the P-AADS, the apex bank’s Director, Development Finance Department, Mr. Yusuf Philip, explained that the interest rate under the intervention shall be 5.0 per cent per annum, up to February 28, 2021; while from March 1, 2021, interest on the facility would be nine per cent per annum, all inclusive.
Philip clarified that for annual crops, the maximum tenor shall be six years with six months moratorium, while for perennial crops, maximum tenor shall be 10 years with one-year moratorium.
This is even as he pointed out that the collateral for the facility to be pledged by participants under the Scheme shall be title of the cleared land and other acceptable collateral prescribed under the Anchor Borrowers’ Programme (ABP).
The Director expatiated: “The Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS) shall be funded from the Anchor Borrowers’ Programme (ABP). The maximum loan accessible under the Scheme shall be N2 billion per obligor.
“The facility shall be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland”, he added.
According to him, the scheme is aimed at exploring private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities as well as to complement the initial Accelerated Agriculture Development Scheme (AADS) which is targeted at tackling the problems of food security and youth unemployment in the country.
He explained that the AADS was aimed at engaging 370,000 youths in agricultural production, in collaboration with state governments, stressing that the broad objective of the P-AADS is to facilitate increased private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation and economic diversification.
The Director clarified that the specific objectives were to fast track land clearing for primary production of agricultural commodities; promote food security through the provision of large contiguous land for agricultural production across all states.
Others include to 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; and engender job creation for individual farmers that will cultivate on the cleared land.”
On eligible participants in the scheme, the banker listed them to 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.
In addition, the Director explained that the agricultural commodities eligible for consideration under the Scheme, included rice, maize, cassava, cotton, wheat, tomato, poultry, fish, sorghum, oil palm, cocoa, livestock/dairy, and any other commodities as may be listed by the apex bank from time to time.
According to him, to be eligible for the P-AADS, the prospective participants must be existing or new firms engaged in agricultural production with proven capacity and bankable proposal, and possess acceptable title for contiguous lands of not less than 20 hectares.
Such beneficiary must also have good credit record; be able to provide the required collateral for participation and provide evidence of capacity to cultivate a focal commodity directly or engagement of farmers, including youths as in-growers or out-growers to cultivate on the land after clearing.
The Director explained that the apex bank provided the fund, act as Managing Agent, issue and review modalities and operating guidelines from time to time; provide regulatory and supervisory oversight; monitor, evaluate and conduct impact assessment of the programme in conjunction with other stakeholders and provide periodic reports on the programme.
He, however, maintained that the participating banks shall conduct due diligence on prospective participants; access funds from the CBN for on-lending; ensure that payments are made directly to mechanization service providers for the land clearing; book loans for the successful applicants at the prescribed interest rate and monitor the utilisation of the facility to ensure achievement of the objectives of the scheme.