CBN Opens Application for N50 Billion Agricultural Credit Guarantee Scheme
The Central Bank of Nigeria (CBN) has officially opened applications for the Agricultural Credit Guarantee Scheme Fund (ACGSF), a federal government initiative designed to enhance credit access for farmers and agribusinesses across Nigeria. This scheme aims to bolster agricultural production, support value chain investments, and strengthen national food security efforts.
Key Features of the ACGSF Programme
Managed by the CBN, the ACGSF provides a government guarantee covering up to 75% of agricultural loans issued by participating commercial and microfinance banks. This guarantee encourages financial institutions to extend credit more readily to the agricultural sector, addressing longstanding financing gaps.
Farmers can apply for loans to fund various activities, including expanding farmland, purchasing equipment, increasing crop production, livestock farming, and agro-processing. The programme currently has a share capital of N50 billion, underscoring its scale and potential impact on Nigeria's economy.
Loan Details and Application Process
Under the ACGSF, loan amounts vary based on collateral and creditworthiness. Non-collateralised loans are capped at N100,000, while collateralised loans can reach up to N50 million. Acceptable collateral includes land charges, movable property, warehouse receipts, stocks, shares, life insurance policies, and personal guarantees.
To apply, farmers must visit a participating bank, request an agricultural loan under the ACGSF, and complete the prescribed application form. The bank will review the application and forward it to the CBN for processing. Credit checks through the Credit Bureau and site visits by Development Finance Office officials may be conducted to verify projects.
Additional Benefits and Support Mechanisms
Farmers who repay loans on time may benefit from the Interest Drawback Programme (IDP), which offers a 40% rebate on interest paid. This initiative, with a capital base of N2 billion funded jointly by the federal government and CBN, aims to reduce borrowing costs and promote timely repayment.
In case of loan default, the CBN guarantees 75% of the outstanding balance after the bank has pursued recovery efforts and realised any collateral. Banks are required to continue recovery actions even after receiving compensation under the guarantee.
Broader Context and Related Initiatives
The ACGSF is part of broader federal government efforts to support agricultural growth and food security. It complements other programmes like the FarmerMoni Scheme, which offers interest-free loans up to N300,000 under the Government Enterprise and Empowerment Programme (GEEP) to empower smallholder farmers with inputs such as seeds and fertilisers.
This launch comes amid ongoing financial sector developments, including CBN's recapitalisation requirements for banks, highlighting the interconnected nature of Nigeria's economic policies aimed at fostering sustainable development.
