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CBN approves N3.88bn for agric projects

By on November 24, 2014

A total of N3.883bn was approved by the Central Bank of Nigeria through five domestic banks for agricultural projects across the country in the month of August.

The projects, according to the financial regulator, were executed under the Growth Enhancement Scheme of the Federal Government. The funds were disbursed under the CBN’s Credit Risk Guarantee scheme, it stated.

The latest report on the activities of the business unit of the Development Finance Department of the CBN for the month of August also stated that a total of N19.3bn was given out as credit risk by banks for agricultural projects from inception to date.

According to the report, the N3.88bn approved in August was credit guarantee under the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending-GES framework.

NIRSAL is a mechanism designed to provide farmers with affordable financial products and reduce the risk of exposure of financial institutions that lend to the sector.

It is also expected to build the capacity of banks to lend to agriculture as well as provide incentives for those that are financing the sector

The CBN said, “Seven CRGs valued at N3.03bn were issued during the month under review. Cumulatively, 53 CRGs valued at N19.3bn were issued from inception to date. Eighteen CRGs valued at N3.88bn were approved through five banks under the 2014 NIRSAL-GES framework within the period under review, bringing the cumulative disbursement under the NIRSAL GES scheme to N32.95bn for 158 projects.”

The central bank said the activities undertaken by the department in the period under review contributed towards achieving the mandate of the real sector growth, financial inclusion and entrepreneurship development.

It said the strategic initiatives implemented comprised the NIRSAL, Commercial Agriculture Credit Scheme, Agricultural Credit Guarantee Scheme Fund, Agricultural Credit Support Scheme, and Interest Drawback Programme.

Others are microfinance policy, Financial Inclusion, Entrepreneurship Development, Power and Airline Intervention Fund, Small and Medium Enterprises Credit Guarantee Scheme and SME Restructuring/Refinancing.

It said claims for NIRSAL Interest Drawback Programme were paid quarterly for each of the projects.

The bank said, “Cumulatively, 25 projects had benefited under the IDB till date. During the period under review, the IDB claims valued at N0.524m were processed and paid, bringing the total IDB claims paid under NIRSAL to N206.216m.”

The CBN listed validity of information provided by counter parties for the CRG, lack of information technology and infrastructure in respect of movement to NIRSAL head office, and manpower shortage as challenges faced by the scheme.

Going forward, the bank said NIRSAL would sell guarantee on 75 per cent, 50 per cent and 30 per cent to primary producers, processors and logistics providers, respectively.

It said the guarantee would be extended only to projects with fixed value chain and the bank would continue to collaborate with stakeholders on the way forward, as well as inaugurate suitable mechanisation framework.

On the agriculture credit scheme, the bank said it was established to finance large ticket projects along the agricultural value chain.

It added that the scheme was being administered at a single digit rate of nine per cent to beneficiaries for a period of seven years, which had been extended to 2025.

It said state governments, including the Federal Capital Territory could access a maximum of N1bn each for on-lending to farmers’ cooperatives or other areas of agricultural intervention.

The report stated that no money was released from the CACS receivable accounts during the period under review, adding that the sum of N239.329bn had so far been released to the economy under the scheme for 316 projects through 20 banks.

This, it added, was made up of N199.831bn from the CACS receivable account for 273 projects and N39.499bn from CACS repayment account for 43 new projects and 19 enhancements.

 

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