Tuesday, November 10,
2020 / 8:36 PM / by CBN / Header Image Credit: VoN
The Central Bank of Nigeria (CBN), in line with its developmental
mandate, continues to develop and introduce development finance programmes and
schemes to expand access to finance to critical sectors and segments of the
economy to achieve food self-sufficiency as well as diversification. While
pursuing this mandate, the population of the country has continued to rise at
nearly 3% annually. Recent studies indicated that the country's population
pyramid is bulging around the youth segment, with an estimated 75 per cent of
the population identified to be aged below 35 years. A large segment of this
population would have eked out a living if adequate opportunities were
harnessed in agriculture given its potential of employing over 70% of the
While addressing the rising food security challenge due to
unproportionate production compared to population growth; value addition to
agriculture; including provision of more land for cultivation has remained
stagnant over the years.
To address the food security and youth unemployment challenges across
the country, the CBN introduced the Accelerated Agriculture Development Scheme
(AADS) to engage 370,000 youth in agricultural production, in collaboration
with state governments. The Private Sector-Led Accelerated Agriculture
Development Scheme (P-AADS) was also developed to complement AADS by exploring
private sector partnership to facilitate more rapid land clearing for
production of key agricultural commodities.
Objectives of the Scheme
The broad objective of the P-AADS is to facilitate increased private
sector agricultural production of staple foods and industrial raw materials, as
well as support food security, job creation and economic diversification.
The specific objectives are to:
- Fast track land clearing for primary
production of agricultural commodities;
- Promote food security through the
provision of large contiguous land for agricultural production across all
- Collaborate with agro-processors engaged
in backward integration by providing financing for extended land clearing in
proximal locations for cultivating commodities for supply of industrial raw
- Support other capable stakeholders
interested in unlocking land for agriculture through appropriate financing; and
- Engender job creation for individual
farmers that will cultivate on the cleared land.
3. Eligible Participants
- Agro-processors of agricultural commodities engaged in backward
- Prime anchors and commodity associations participating under the
Anchor Borrowers' Programme (ABP) with evidence of contiguous land readily
available for clearing and cultivation of agricultural commodities; and
- Other companies and individuals with evidence of ownership of
contiguous land readily available for clearing and cultivation of agricultural
Agricultural commodities eligible for consideration under the Scheme
- Oil Palm
- Any other commodities as may be
listed by the CBN from time to time.
Prospective P-AADS participants must:
- be existing or new firms
engaged in agricultural production with proven capacity and bankable
- possess acceptable title for
contiguous lands of not less than 20 hectares;
- have good credit record
- be able to provide the required
collateral for participation and
- Provide evidence of capacity to
cultivate a focal commodity directly or engagement of farmers, including
youths as in-growers or out-growers to cultivate on the land after
The Private Sector-Led Accelerated Agriculture Development Scheme
(P-AADS) shall be funded from the Anchor Borrowers' Programme (ABP).
The maximum loan accessible under the Scheme shall be N2 billion per
obligor. The facility shall be repaid from the Economics of Production (EOP)
for cultivating on the cleared farmland.
Interest rate under the intervention shall be 5.0% p.a. (all inclusive)
up to 28th February 2021. Interest on the facility from 1st March 2021 shall be
9% p.a. (all inclusive).
Annual crops: Maximum
tenor of six (6) years with six (6) months moratorium.
Perennial crops: Maximum
tenor of ten (10) years with one-year moratorium.
The collateral to be pledged by participants under the Scheme shall be
title of the cleared land and other acceptable collateral prescribed under the
ABP. CBN shall bear 50% of the credit risk in the event of default by the
Repayment of the facility shall be made on instalment basis through the
participating banks and spread over the EOP of the cultivated commodities. The
participating banks shall remit repayments received to the CBN on quarterly or
annual basis depending on the commodity financed.
- Contiguous land of not less than 20 hectares shall be provided for
specified agricultural commodities cultivation.
- Evidence of land ownership in form of any
acceptable title including lease of a minimum of 15 years.
- Soil analysis and testing shall be carried
out on the land to assess the suitability for cultivation of the intended crop.
- Anchor/commodity association/processor
submits Expression of Interest (EOI) with all requisite documents including
crop to cultivate, to participating banks for consideration.
- Participating bank conducts due diligence
and applies to the CBN for release of funds for land clearing in line with
approved schedule of average cost per hectare (see Appendix 1).
- CBN approves and releases funds to
participating banks for disbursement.
- CBN bears 50% of the credit risk in the
event of default by the participants
- Anchor/Processor/Aggregators with proven
capacity or service providers engaged to clear the farmland within the
prescribed indicative cost regime (see Appendix 1) and spread over the facility
tenor in the EOP.
- Cleared land shall be parcellated to
farmers aggregated and coordinated into clusters by identified anchor/commodity
- Anchors/Processors/Aggregators shall sign
purchase agreement with farmers for offtake of crops produced on the cleared
land x. Farmers cultivate focal commodity on the cleared land xi. Produce
off-taken on cash and carry basis to enable farmers meet obligations.
13. Verification/Monitoring of Projects
Periodic monitoring of projects financed under the Scheme shall be
conducted jointly by the PB and CBN.
14. Responsibilities of Stakeholders:
For the effective implementation of the intervention facility, the
responsibilities of the stakeholders shall include:
14.1 Central Bank of Nigeria (CBN) shall:
i. Provide the fund.
ii. Act as Managing Agent.
iii. Issue and review modalities and operating guidelines from time to
iv. Provide regulatory and supervisory oversight.
v. Monitor, evaluate and conduct
impact assessment of the programme In conjunction with other stakeholders. vi.
Provide periodic reports on the programme.
14.2 Participating Banks (PB) shall:
- Conduct due diligence on
- Access funds from the CBN for
- Ensure that payments are made
directly to mechanization service providers for the land clearing
- Book loans for the successful
applicants at the prescribed interest rate.
- Monitor the utilisation of the
facility to ensure achievement of the objectives of the scheme
14.3 Anchor/Processor/Off-taker shall:
i. Sign off-take agreement with the farmers that will cultivate on the
- Off-take produce at the
prevailing market price or average of 3 prices within the State
- Make payment for all produce
collected within 5 working days of collection
- Be responsible for the management of the
- Provide extension services
- Commit to abide by the terms of
- Monitor farmers and repay the
loan as and when due 8 Classified as Confidential
14.4 Private Land Clearing Service Provider shall:
- Clear the land in line with the
service level agreement and approved costs schedule by the CBN
- Provide suitable farmland
feeder access paths
- Provide farmland drainage iv.
Remove logs and stumps and ensure land is ready for cultivation.
14.5 Smallholder Farmers
- Cultivate focal crop on the land for within the loan period until
full repayment of the land clearing facility.
- Sell harvested produce to the processor/anchor.
- Repay instalment as and when due till full liquidation of the
facility where facility is sourced by commodity association on behalf of
15. Infractions and Sanctions - Participating Banks
- Diversion of funds by the participating
banks shall attract a penalty at its maximum lending rate at the time of
infraction. In addition, such PFI shall be barred from further participation
under the scheme;
- Non- rendition or false returns shall
attract the penalty stipulated by BOFIA
- Charging interest rate higher than
prescribed shall attract the penalty stipulated by BOFIA
- Any participating that fails to disburse
the fund within the stipulated days of receipt to the borrower, shall be
charged penalty interest at the PFI's maximum lending rate for the period the
fund was not disbursed;
- Failure to remit repayments received to
CBN within the stipulated period shall attract penalty interest at the PFIs
maximum lending rate.
The CBN reserves the right to impose the appropriate sanction in respect
of any other breach of the guidelines not specified in this section.
Yusuf Yila Philip
Director Development Finance Department
Central Bank of Nigeria
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