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CBN’s Anchor Borrowers: Catalyst for self-sufficiency

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CBN’s Anchor Borrowers: Catalyst for self-sufficiency

The Central Bank of Nigeria (CBN)’s development agenda, christened Anchor Borrowers’ Programme, for farmers who had already started repayment, if sustained, would not only make the nation self-sufficient in food production, but also create jobs and conserve foreign exchange earnings, which is needed so badly now

 

Scathing figures from the World Bank had revealed that Nigeria is one of the toughest places in the world one can run business successfully based on her 168th position on the Ease of Doing Business globally.

Indeed, findings have also shown that because of the harsh business environment, challenges and lack of infrastructure in the country, many financial institutions operating in the country averse to lending money to investors, businessmen/women, farmers and others for start up business. However, the reason is not farfetched based on the continued rise in non-performing loans of lenders, which is threatening the financial industry.

This has prompted the banks to jack up their interest rate for customer willing to secure loans for businesses for fears of defaults in the process of servicing the loans. Consequently, the Nigerian farmers are the mostly affected as high interest rate from banks remained the bane of financing of agriculture and the development of good agricultural practices. Particularly, a situation where commercial banks request for as much as 25 per cent interest on agricultural loans is capable of crippling the government’s policy of economic diversification through agriculture.

Having realised the turbulent challenges facing Nigerian farmers in the process of securing loans, the Federal Government, through the CBN came to the rescue of farmers in rice production by initiating Anchor Borrowers’ Programme meant to boost rice sufficiency in the country.

In addition, the apex bank also approved lending of special intervention fund to agriculture and manufacturing sectors at a single digit in order to boost growth and development in these sectors.

Understanding CBN’s ABP

In 2015, the banking watchdog launched an Anchor Borrowers Programme in 14 states of Kebbi, Sokoto, Niger, Kaduna, Katsina, Jigawa, Kano, Zamfara, Admawa, Plateau, Lagos, Ogun, Cross- Rivers and Ebonyi for rice and wheat farmers to advance their status from small holder farmers to commercial or large growers.

The apex bank said the effort, which was part of its development agenda would not only create millions of jobs but also capable of lifting thousands of small holder farmers out of poverty in the country.

During the flagged-off in Birni-Kebbi, Kebbi State in 2015, the CBN set aside N40 billion out of the N220 billion Micro, Small and Medium Enterprise Development Fund (MSMEDF) to be given to farmers at single digit interest rate of maximum nine per cent per annum under the ABP.

The CBN said it established the Anchor Borrowers’ Programme (ABP) with a view to collaborating with anchor companies involved in the production and processing of key agricultural commodities.

According to the CBN governor, “The fall in oil prices has given us a timely reminder that we have no choice but to diversify our economy away from oil, and into agriculture, manufacturing, services, and other non-oil sectors.

“The ‘Anchor Borrowers’ Programme’ is one of the CBN’s policy initiatives to pursue the aforementioned development objectives, namely the creation of jobs, reduction in food imports, and diversification of our economy.

The Programme aims at creating economic linkages between over 600,000 smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilization of integrated mills.”

He believes the effort would close the gap between the levels of local rice production and domestic consumption as well as complement the Growth Enhancement Support (GES) Scheme of the Federal Ministry of Agriculture by graduating GES farmers from subsistence farming to commercial production.

Farmers’ loans repayment

However, last week, benefiting farmers under the CBN’s Anchor Borrowers’ Programme paid back over N7 billion from the loans they got under the programme, the apex bank disclosed.

The bank said this was contrary to insinuations in some quarters that the farmers were unwilling to pay back their loans. CBN’s spokesperson, Isaac Okorafor, said details of the loan disbursement and repayment as at March 31 showed that the farmers has so far repaid about N7.119 billion out of a total of N33.34 billion released to them.

The loans were disbursed govthrough the 12 participating financial institutions to 146,557 farmers across 21 states cultivating over 180,018 hectares of land. Okorafor said of the total amount released to date, about N15.137 billion disbursed to 73,941 farmers in Kebbi State was due for repayment. It is some of the benefitting Kebbi farmers that repaid about N7.119 billion.

New Telegraph’s investigation had showed how thousands of Kebbi farmers benefitted from the Anchor Borrowers’ Programme as well as its successes and challenges. The repaid amount, which had since been returned to the CBN by the participating banks, represents about 47 per cent of the total amount to be repaid by the Kebbi farmers.

The apex bank said the balance of N18.203 billion of the 12 months tenured loans released to farmers in the other 20 states for two cropping (wet and dry) seasons was not yet due for repayment. However, Okorafor said, farmers in other benefiting states have also commenced the repayment to the tune of N1.238 billion, which is already being transferred to the CBN.

“Efforts are currently being made by the participating state governments to ensure that all outstanding loans are repaid by the farmers as soon as they are due before commencement of the next dry season cultivation.

“This is to enable the CBN extend similar gestures to farmers in other states, which have indicated interest in participating in the Anchor Borrowers Programme,” Okorafor said.

AFAN’s position

Following the announcement by the banking watchdog of the farmers’ loans repayments, the All Farmers Association of Nigeria (AFAN) has commended the rice farmers for being a worthy example of a true representation of Nigerian farmers for summoning the courage to commence the loans repayment secured under the ABP.

Chairman, Lagos Chapter of AFAN, Otunba Femi Oke, in a chat with New Telegraph, said that the CBN has demonstrated through the ABP that Nigerian farmers have brighter future in this country.

Oke commended the apex bank for the fate it had in Nigerian farmers under the ABP, saying that no bank in the country could give such loans to farmers. According to him, the CBN’s ABP has turned the face of agriculture in the country, adding that President Muhammadu Buhari is truly committed to improve the agric sector and Nigerian farmers’ living status.

“Yes, we (AFAN) members are happy to hear the news that our counterparts in the rice farming have started repaying back their loans. It is a good thing and we immensely thank the CBN for this initiative and for having fate in us,” Oke said.

The success of the ABP and the repayment of the loans show that Nigerian farmers are changing the face of lending system in the country’s banking sector. Hopefully, this loan repayment under ABP will change the mindset of Nigerian banks in lending to farmers to boost agriculture.

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