CBN Expands ABP To Other Agric Products


When the Anchor Borrowers Programme was launched in 2015, it was focused on improving the local production of rice and reducing the volume of scarce foreign exchange that is expended on the importation of the staple food.

In times past, Nigeria has used billions of dollars to import rice, which is grown within the country. According to the governor of the Central Bank of Nigeria, Godwin Emefiele, the country spends the on top four imported food items including rice and wheat consume over N1 trillion in foreign exchange annually.

However, the crash in the price of oil had reduced the inflow of foreign exchange in the country, prompting the government to begin the promotion of import substitution. While the Anchor Borrowers Scheme was conceived out of the Central Bank Bank (CBN) resolve to achieve a strong and viable agricultural base with more integrated value chains, enhanced food security, fewer imports and higher productivity, it started with a focus to improve local rice production.

Under the programme, the Central Bank of Nigeria (CBN) is setting aside N40 billion out of the N220 billion Micro, Small and Medium Enterprise Development Fund to be given to farmers at single digit interest rate of maximum nine per cent per annum.

The programme is expected to increase the total value of agricultural lending from around four percent to about 7.0 per cent of total bank lending within the next four years. It is also expected to increase capacity utilisation in the agro-allied industry from the current level of less than 50 per cent to at least 70 per cent in the next five years

Kicking off in Kebbi State, the ABP had been pushed for rice and wheat farmers in 14 states, Kebbi, Sokoto, Niger, Kaduna, Katsina, Jigawa, Kano, Zamfara, Admawa, Plateau, Lagos, Ogun, Cross-Rivers and Ebonyi, to advance the status of the local sustenance farmers from small holder farmers to commercial or large growers.

CBN Boss Godwin Emefiele

The ABP which has so far involved more than 100,000 small farmers in these states has been successful. Not only is the popularity of the locally grown rice continued to grow, it is becoming more favaoured in many homes in the country.

An example of its success is the Lake rice which was sold in Lagos by the state government during the end of year festivities period at a subsidized rate of N12,000 as against the N20,000 at which the imported rice was sold. To Emefiele, the CBN’s Anchor Borrower and the Federal Government’s provision of credit scheme to farmer have resulted in improved rice production, though the system is yet to be completely settle.

Following the success of the scheme for rice production, the apex bank had last week in the new guide line for the ABP expanded the coverage of the Programme to include other farm produce.

According to the guideline released last week, asides rice and wheat, the programme now makes provision for Cotton, Roots and Tubers (Cassava, Potatoes, Yam, Ginger etc.), Sugarcane, Tree crops (Oil palm, Cocoa, Rubber etc.), Legumes (Soybean, Sesame seed, Cowpea etc.),Tomato and Livestock (Fish, Poultry, Ruminants etc.).

This is expected to create a boom in the Nigerian agricultural sector the same way it has impacted rice farming in the country. According to the Managing Director of natnudO Foods, Dr Ayoola Oduntan, involving the poultry sector in the Anchor Borrowers Programme will positively impact the sector.

Oduntan last year told Leadership that the Nigeria Poultry Association had been in talks with the CBN and Nigeria Incentive based Risk Sharing System for Agricultural Lending (NIRSAL) on being involved in the ABP. “If that takes off in collaboration with some of the commercial banks, we should be able to trigger through the anchor borrowers scheme the success and the long term growth in the poultry industry especially the chicken aspect.

“With that combination, what will happen is that a company like us will be an anchor. NISRAL will provide a guarantee of the products, CBN will provide the funds, we will supply the products to the farmers. The farmers will groom the birds, mature the and sell the finished products back to us.

“We will process and sell through our value chain. If the farmer is prosperous, the bank will get its interest back, we will get our chicken and satisfy the nation. This is not reinventing the wheel, this is the model that is currently working everywhere in the world where you find successful farmers.”

Likewise, the tomatoes farmer and the paste manufacturers will also benefit from the scheme as the situation where tomatoes worth millions of naira are being wasted annually without the local consumption need being met.

Not only will the farmers have the tomatoes taken off them instead of having it waste away on the farm, road and markets, the tomatoes paste manufacturers will be able to easily source fresh tomatoes and not experience draught of raw materials.

The same will also go for other farm produce that has been covered by the new ABP guideline, thereby leading the country into self sustenance in food production and ultimately help reclaim its position as one of the food producers in the world over time. It will also be a major contributing factor to reducing the level of unemployment in the country as more people return to the farms.

The key stakeholders includes the CBN, NIRSAL, federal ministry of finance and agriculture; state Governments/Agric. Development Programme (ADPs); anchor companies; financing Banks; insurance companies; development partners; farmers/Out-growers and project Management Team.

Under programme, the CBN is to provide finance through the MSMEDF at nine per cent interest rate; Coordinate the entire programme and serve as secretariat. NIRSAL is to provide technical assistance to farmers, extension workers and banks and organise farmers into groups/cooperatives.

Nigerian Agricultural Insurance Corporation (NAIC) on the other hand will provide insurance cover to the projects under the programme while development farmers will provide technical assistance while financial institutions will provide financing through the CBN MSMEDF at an all-inclusive interest rate of 9.0 per cent per annum; Disburse directly to co-operatives’ accounts and subsequently to the individual farmer’s account; Ensure that all payments due to suppliers are made on behalf of the farmers.

Anchor Companies will be expected to identify and collaborate with CBN and NIRSAL to organise farmers into co-operatives; assist in identifying input suppliers for quality assurance; provide extension service experts to support and ensure achievement of the targeted yield, monitor harvest and facilitate full evacuation of produce and buy up produce from farmers at agreed price.

The farmers/Out growers on their own are expected to organise themselves into cooperatives; ensure credibility of members; cross-guarantee one another and abide by the terms of the MoU; must be fully responsible for their farms and agree to work with extension agents attached to them and sell all produce to the off-taker based on the agreed price without side selling. They are also expected to abide with the agreed terms of lending and repayment.

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