CBN ANCHOR BORROWER'S SCHEME

The Central Bank of Nigeria (CBN) has released the guidelines for its anchor borrower's programme for farmers.

Here is the simplest way to access the loan scheme: Form a farmers cooperative with other farmers producing the same product; get linked to a company that uses the product as input then through a bank, the cooperative can apply for the loan.

The fulcrum of the programme is the company that processes the farm produce into other consumables. This is the anchor because, it will pay the farmers earlier agreed prices for the produce and also help channel repayment of the loan.

The intention of the programme, says the CBN, is to increase bank financing of agriculture; reduce importation of farm produce and processed food; create a new generation of farmers, help reduce poverty and assist rural small holders.

Farmers who stand to benefit are those involved in growing cereals, root crops, sugar cane. Tree crops, tomato and rear livestock.

The money for the scheme will come from the N220bn already set aside by the CBN for funding micro and medium enterprises. It is to be given in kind, mainly and also in cash.

The process starts with expression of interest through a letter by a state government or anchor company then moves on to formation of the project management team, verification of farmers and farm sizes; confirmation by headquarters of the finance organisation involved and identification of farm input suppliers.

Next there will be a town hall meeting to agree on production per hectare, offtake price to be paid by anchor, and formal signing of agreement.

Presently, adds the CBN, interest rate on the N220bn facility is 9% and the farmers scheme rate will always reflect the facility's ruling rates.

The loan will be disbursed through deposit money banks, development finance banks and micro finance banks.They will collect at 2% from the CBN then onlend at 9%.

All participating farmers will be expected to provide minimum of 5% equity participation in the project.

Sanctions were also clearly stated in the guidelines covering abuses like input diversion, fund diversion, non submission of produce to anchor, and side selling, amongst others.

Insurance for the programme is to be provided by the Agricultural Insurance Corporation.

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