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Anchor Borrowers Programme shows CBN’s agric financing misstep

farmers

With the fallout of the Anchor Borrowers’ Programme (ABP) introduced by the Godwin Emefiele-led Central Bank of Nigeria (CBN), his successor has been advised to focus on monetary policy and leave agricultural financing to other institutions.

The CBN, in line with its developmental function, established the ABP, which was launched by President Muhammadu Buhari on November 17, 2015, to create a linkage between anchor companies involved in the processing and smallholder farmers of the required key agricultural commodities.

The CBN said it disbursed a total of N1.1 trillion and only N546 billion has been repaid.

Farmers said the intervention programmes must be transparent, properly implemented, and institutionalised in the Bank of Agriculture to ensure real farmers are beneficiaries to drive impact.

“The CBN intervention in the form of the Anchor Borrower Programme may have been conceived as a laudable project but its implementation was impaired by a lack of due diligence and direct involvement of some key or important stakeholders like All Farmers Association of Nigeria (AFAN) and Federal Ministry of Agriculture and Food Security (FMAFS) for it to be more efficacious and sustainable,” said Ibrahim Kabiru, National president of All Farmers Association of Nigeria.

Read also: Farmers’ N518bn default shows anchor borrowers underbelly

Kabiru said the new CBN governor should institutionalise the programme by involving the FMAFS and AFAN.

He said: “The target crops must be justified and properly appraised before embarking on large-scale production and value addition. For the intervention to be transparent and equitable, it should have a monitoring and evaluation component embedded in it from the outset.

Kaliba Bilala, founder Tanabit said “It is not the job of the central bank to direct loans to specific sectors. This is an aberration and a misunderstanding of central banking. In other words, just because Emefiele dabbled in some things does not make it appropriate or right.”

“The control of CBN in interventions must be removed if truly this administration wants to record success. It must also eliminate corruption in its programmes,” Jude Obi, president of the Association of Organic Agriculture Practitioners of Nigeria, said in a response to questions.

The CBN said on its website that its role in the ABP scheme was to ratify the economics of production, validate the farmers’ list for participation, carry out monitoring of the project to ensure compliance, and bear 50 percent credit risk on outstanding amounts in default.

It said the model of administration of ABP that involves the collaboration with the Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL) is called the ‘NIRSAL Guarantee Model’. It involves the deployment of its Credit Risk Guarantee (CRG) Instrument to participating financial institutions (PFIs). It is expected that the CRG will effectively reduce the risks of the PFIs further and enhance participation in the programme.

Read also: Update: CBN’s anchor borrowers programme supports 1.5m farmers

It said NIRSAL would provide a maximum guarantee of 75 percent of the financing to the PFI at a cost of one percent CRG fee; and the CBN shall bear 50 percent credit risk on the outstanding amount in default.

President Bola Tinubu recently appointed Jim Obazee as a special investigator to probe the activities of the CBN and NIRSAL.

In a letter dated July 28, Tinubu said the appointment of Obazee, relying on the fundamental objective outlined in Section 15(5) of the Nigerian Constitution, was in furtherance of his administration’s anti-corruption fight.