Anchor Borrower: Why beneficiaries are not repaying loans – Farmers

Default payments have continued to trail the Anchor Borrowers Programme (ABP) of the Central Bank of Nigeria (CBN), as over 50 percent loan remained unpaid seven years after.

Launched in 2015, the ABP scheme was aimed to provide farmers with the critical funds and inputs needed to increase local production.

According to the International Monetary Fund (IMF), 76 percent of the loans collected by beneficiaries were yet to be repaid.

Speaking with BusinessDay, the heads of various farmer associations alluded that the loans were not disbursed adequately, hence the difficulty in ensuring repayment.

Yunusa Yabwa, the national secretary of All Farmers Association of Nigeria (AFAN), said that the programme was abused, adding that it did not meet expectations to boost food production.

He alleged that most beneficiaries of the programme were not farmers. “Many people collected the loan to invest in other projects not farming, and that is why it is difficult to ensure repayment.

“The anchor borrower is a laudable programme but there are challenges of recovery. Some of our members benefited from it, but most people that benefited are not farmers.

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“One thing we know is that only few farmers benefited from the programme and it’s not supposed to be.

”CBN and NIRSAL that disbursed it are unable to recover the loans because they cannot trace the debtors, which unfortunately are not farmers. Many collected the loans in the name of farmers. The banks were only focused on disbursing the funds, so they were not bothered about who got the funds but recovery.

The IMF stated that agricultural credit in the country has not significantly succeeded in increasing production due to the difficulty reaching the targeted farmers.

It said that although the CBN allows farmers to pay in cash or give the central bank produce of the same value under the ABP, repayments have been very low.

“For the Anchor Borrowing Programme, repayment is also low at 24 percent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.

“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases (e.g., new agricultural input trading companies to elicit trading rents).”

The president, Yam Farmers and Marketers Association of Nigeria, Simon Irtwange, told BusinessDay that even though yam was mentioned among the agricultural commodities covered under the programme, efforts made by the association to access the loans did not yield results.

According to him, “As an association we followed the due process to ensure our members benefit from the programme but were rather harassed by the NIRSAL boss.

He said that the programme from the onset was designed to favour a few Nigerians.

“If the government wanted to drive such programmes, it needed to ensure that it was done with adequate engagement with commodity associations,” he said.

The CBN has said that the total repayments expected under the programme stood at N503 billion, representing 52.39 percent of total monies disbursed.

According to AbdulMumin Isa, the apex bank’s acting director, corporate communications department, the bank had released N1.08 trillion, as of February 28, 2023, of which N960 billion was due for repayment.

He also disclosed that ABP had supported about 4.57 million smallholder farmers who cultivated over 6.02 million hectares of 21 commodities across the country as of February 2023.