CBN Circulars & Publications | |
CBN Circulars & Publications | |
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Tuesday, November 10,
2020 / 8:36 PM / by CBN / Header Image Credit: VoN
1.
Introduction
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
nation's workforce.
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.
2.
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:
3. Eligible Participants
4.
Focal Commodities
Agricultural commodities eligible for consideration under the Scheme
are:
5.
Eligibility Criteria
Prospective P-AADS participants must:
6.
Funding
The Private Sector-Led Accelerated Agriculture Development Scheme
(P-AADS) shall be funded from the Anchor Borrowers' Programme (ABP).
7.
Loan Limit
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.
8.
Interest Rate
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).
9.
Loan Tenor
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.
10.
Collateral Requirement
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
participant.
11. Repayment
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.
12. Modalities
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
time.
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:
14.3 Anchor/Processor/Off-taker shall:
i. Sign off-take agreement with the farmers that will cultivate on the
land
14.4 Private Land Clearing Service Provider shall:
14.5 Smallholder Farmers
15. Infractions and Sanctions - Participating Banks
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
November 2020
Appendix
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