Anchor Borrowers' Programme: Progress Appears Increasingly Uphill


Thursday, August 26, 2021 / 08:26PM / by CSL Research / Header Image Credit: CBN


Background to the Anchor Borrowers' Programme

The CBN in line with its developmental function established the Anchor Borrowers' Programme (ABP) on November 17, 2015. The program creates a linkage between anchor companies that are involved in the processing and smallholder farmers (SHFs). The aim is to provide farm inputs, both in-kind and cash to smallholder farmers to boost domestic production of agricultural commodities and stabilize the supply of inputs to agro-processors. Beyond this, the other objective of the programme includes increasing banks' financing to the agricultural sector and improving capacity utilization within the sector.

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Broad-based impact of the programme

The ABP programme has financed over 2.5m projects, with loans worth N497.2bn disbursed to 3.1m farmers in the country. While this may be fascinating, the lack of loan repayment by farmers remains a major downside, as only 23.9% of the disbursed fund has been repaid since inception. While the CBN have been clamouring for beneficiaries to repay their loans to ensure the sustainability of the scheme, many of the farmers indicated an inability to repay, as the rising insecurity has forced them to abandon their farms. In addition, we recall in 2019, many beneficiaries refused to settle their obligations, claiming that they considered it "their share of the national cake".


Impact on the Agric sector of the economy

While we acknowledge the need for CBN interventions in the economy, ABP has not entirely translated into improved Agric GDP. To validate this claim, Agric growth pre-ABP averaged 4.23% versus 2.89% during the ABP.



Looking ahead, we expect the CBN to continue to sustain its interventions in the critical sectors of the economy, particularly in Agriculture, Manufacturing, MSMEs, Infrastructure, Creative Industry, Health etc.; to stimulate robust economic growth and quick recovery post-pandemic. Nevertheless, we think the CBN needs to develop a robust framework to fast track repayment of credit by farmers and bring to books farmers who fail to repay.


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