CBN identifies major challenges against CACS

Failure of deposit money banks (DMB) to adhere to guideline and poor monitoring of projects have been identified as major challenges of Commercial Agriculture Credit Scheme (CACS).

According to a report by the Central Bank of Nigeria (CBN) entitled, ‘Development Finance Department (DFD)–Report of the Activities of the Business Unit for the Month of May, 2014’, no fund was released from CACS receivables accounts during the period under review.

The CACS was established to finance large ticket projects along the agricultural value chain. The scheme is being administered at a single digit rate of 9 percent to beneficiaries for a period of seven years. State governments, including the FCT, can access a maximum of N1.0 billion each for on-lending to farmers’ cooperatives or other areas of agricultural intervention.

Consequently, one of the banks was fined the sum of N353.395 million being sanction for infraction of the CACS guidelines during the month.

Cumulatively, the total penalty charged the bank for infractions stood at N1.242 billion from inception in 2009 to May 2014.

Going forward, the Central Bank of Nigeria (CBN) has said it will improve on monitoring of CACS projects which banks have done poorly. The CBN said there is need for impact assessment to ascertain the actual gains of CACS and need to conduct documentary exercise to sensitise the public on CACS.

However, the sum of N229.282 billion has so far been released to the economy under CACS in respect of 304 projects through twenty banks made up of N199.831 billion from CACS receivable account for 273 projects and N29.451 billion from CACS repayment account for 31 new projects and 15 enhancements.

The sum of N701.41 million was released from the CACS repayment account to two participating banks for two projects in May, 2014. 304 beneficiaries made up of 274 private promoters and 30 state governments including the FCT have been sponsored under CACS. The sum of N39.0 billion has been accessed by 30 state governments and the FCT.

According to the report, the sum of N2.340 billion was repaid by two banks in respect of three projects during the month, bringing the total repayment to N39.888 billion in respect of 74 projects.

The balance on CACS fund as at end of May, 2014 was N0.169 billion, while the balance on CACS repayment account was N10.437 billion in the same period.