The Central Bank of Nigeria (CBN) has pegged the limit of loan to be accessed by eligible participants in the Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS).
To address the food security and youth unemployment challenges across the country, the CBN introduced the Accelerated Agriculture Development Scheme (AADS) to engage 370,000 youth in agricultural production, in collaboration with state governments.
P-AADS was developed to complement AADS by exploring private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities.
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 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,” the CBN said in the guidelines for P-AADS.
The guidelines stated that interest rate under the intervention shall be 5.0% p.a. (all inclusive) up to 28th February 2021. Interest on the facility from 1st March 2021 shall be 9% p.a. (all inclusive).
According to the guidelines the Private Sector-Led Accelerated Agriculture Development Scheme shall be funded from the Anchor Borrowers’ Programme (ABP).
The collateral to be pledged by participants under the Scheme shall be title of the cleared land and other acceptable collateral prescribed under the ABP, the guidelines stated.
The CBN said it would bear 50% of the credit risk in the event of default by the participant, while repayment of the facility is to be made on instalment basis through the participating banks and spread over the EOP of the cultivated commodities.
Participating banks shall remit repayments received to the CBN on quarterly or annual basis depending on the commodity financed.
Eligible participants 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.
Diversion of funds by the participating banks shall attract a penalty at its maximum lending rate at the time of infraction. In addition, such PFI shall be barred from further participation under the scheme, the guidelines signed by Yusuf Yila Philip director development finance department.
Agricultural commodities eligible for consideration under the Scheme are: Rice, Maize, Cassava, Cotton, Wheat, Tomato, Poultry, Fish, Sorghum, Oil Palm, Cocoa, Livestock/Dairy, and any other commodities as may be listed by the CBN from time to time.
