26 Aug

Many female entrepreneurs have the desire to start different types of farms and other agricultural related businesses. Agric businesses can be capital intensive which discourages a lot of aspiring entrepreneurs. The Central Bank of Nigeria thereby, developed finance initiatives involving financial institutions to deliver credit services mainly to the agricultural sector, rural development and micro, small and medium enterprises.
The CBN schemes can be categorized into three:
• On-lending: Under this category, the CBN provides cheap funds to banks for on-lending to agribusinesses at maximum interest rate of 9%. Examples of schemes under this are CACS, RSSF and MSMEDF.
• Loan guarantee: under this, the CBN offers to guarantee a portion of the loan granted by the banks. This serves as a source of comfort to banks and especially suitable for prospective customers with inadequate collateral to secure their facility. Examples of schemes under this are NIRSAL (CRG) and ACGSF.
• Interest Rebate: this is specially designed to encourage the customers to meet their obligations on time. For schemes under the category, farmers get interest drawback of between 20-40% of the commercial interest rate charged by the bank when they meet their obligations on time. Examples of schemes under this are NIRSAL (IDP) and ACGSF.
*CACS – Commercial Agriculture Credit Scheme
*MSMEDF – Micro, Small and Medium scale Enterprises Development Fund
*NIRSAL (CRG) – Nigeria Incentive based Risk Sharing for Agricultural Lending- Credit Risk Guarantee
*ACGSF – Agriculture Credit Guarantee Scheme Fund
*NIRSAL (IDP) – Nigeria Incentive based Risk Sharing for Agricultural Lending- Interest Drawback Program
*(RSSF) Real Sector Support Fund
Below are the major CBN intervention schemes:
1. COMMERCIAL AGRICULTURE CREDIT SCHEME (CACS)
Facility type: Term Loan, Over Draft, Import Finance Facility, Stock Finance Facility, Warehousing Facility, Lease Finance Facility.
Purpose: Financing any farm or agro-based enterprise with agricultural asset (excluding land) of not less than N100 million for an integrated farm with prospects of growing the assets to N250 million within the next three years and N50 million for non-integrated farms/agro-enterprise with prospects of growing the assets to N150 million, except in the case of on-lending to farmers’ cooperative societies.
Interest rate: 9%
Amount: Minimum of N50million and maximum of N2 billion for a single obligor
Tenor:
• Based on the gestation period of the enterprise plus three years cash flow allowance and /or working capital facility of one year with provision for roll over.
• All loans and overdrafts shall terminate on September 30, 2025.
2. NIRSAL (CRG)
Nigeria Incentive based Risk Sharing for Agricultural Lending- Credit Risk Guarantee
NIRSAL is a Risk Sharing Fund designed to identify, redefine, measure, re-price and evolve strategies for the risks of lending to the Nigerian agriculture value chain.
The N75b seed fund is managed by NIRSAL plc. to provide Credit Risk Guarantees (CRG) on commercial agriculture loans granted by banks and also provide Interest Draw Back (IDB) to agribusinesses that meet their obligations as at when due.
The Value of CRGs and IDBs granted depend on the category and scale of the agribusiness.
All activities within the agribusiness value chain are covered with no exceptions (Cash crops, Food crops, Poultry, Livestock, Aquaculture, Agro processing, Feed milling, Commodity warehousing/Storage, Agro chemicals, Fertilizer, seeds/Seedling, Breeder stock, Farm equipment and Machineries, Logistics and Transportation).
Facility type: Lease Finance Facility
Purpose: To finance the purchase of tractors and related equipment e.g. harrows, ploughs and harvesters to enable mechanization of farming in Nigeria.
Amount:
• Maximum of N50million for Small and Medium Scale Mechanization
• Maximum of N2biliion for Large Scale Mechanization
Tenor:
• Maximum of N50million for Small and Medium Scale Mechanization
• Maximum of N2biliion for Large Scale Mechanization
Equity contribution: 10% AND IN EXCEPTIONAL CASES, MAXIMUM OF 20%
3. GROWTH ENHANCEMENT SUPPORT (GES) SCHEME
Implemented based on Discussions between FMARD, Cellulant, DMBs, NIRSAL and CBN; and Agreement between NIRSAL and FMARD in 2013. This scheme is specially designed for fertilizer agro-dealers and seed companies to provide farm input to farmers all over Nigeria. NIRSAL provides 75% guarantee on loan disbursed to the agro-dealers for purchase of fertilizer and seeds. 50% interest subsidy is to be paid back by CBN to customer that meets repayment schedule. This scheme has proven to be very successful especially in the Northern part of Nigeria as it has curbed the excesses of middlemen and provided a platform for transparent business.
Facility type: Essentially Overdraft
Purpose: Provision of interest rate support and credit risk guarantee to Lenders on loans extended to agro-dealers serving the Growth Enhancement Support (GES) scheme.
Amount:
• Lender loans to agro-dealers up to a limit of N400M shall automatically qualify for interest rebates.
• For lender loans above N400M, access to rebates shall be on a case by case basis, with final decision resting on the Joint NIRSAL-FMA&RD GES Team.
Interest rate: 18% (Inclusive OF 1% CRG fee to NIRSAL and exclusive of warehouse charges.
Equity contribution: 10% (no loan to obligors unwilling to fund equity.
Tenor:
• Matches planting season e.g. for wet season, loan issued in March should be fully paid off by September or later.
• For dry season, loan issued in November should be fully paid off by March or later.
4. ACGSF – Agriculture Credit Guarantee Scheme Fund
Amount:
• Maximum of N5,000,000.00 to individual with tangible security
• Maximum of N10,000,000.00 to corporate entities/Cooperative with tangible security
Limit of liability of the fund in respect of guarantees: The liability of the Fund will be 75 per cent of the amount in default net of any amount realized by the bank from the security it got from the borrower.
Tenor: The duration of each loan, including moratorium period if any, should be strictly relevant to the gestation period of the project being financed
Obligor equity contribution: Minimum of 25% (no loan to obligors unwilling to fund equity)
Interest rate: Commercial rate
Interest rebate to customer: 40% of Commercial Rate Charged.
5. (MSMEDF) Micro, Small and Medium scale Enterprises Development Fund
Facility type: Term Loan, Import Finance Facility, Stock Finance Facility, Warehousing Facility, Lease Finance Facility
Purpose: Financing SME along the agricultural value chain with agricultural asset (excluding land) of between N5m and N500m and staff strength of between 11 and 200.
Amount:
• Maximum of N50million per obligor.
• A State Government or the FCT shall access a maximum of N2.0 billion.
Tenor: Maximum tenor of one (1) year for micro enterprises and up to five (5) years for SMEs with option of moratorium.
Obligor equity contribution: Optional
Interest rate: 9% (3% to CBN and 7% to the Bank)
Security: Any acceptable collateral in line with Bank’s credit policy
6. (RSSF) Real Sector Support Fund
Facility type: Term Loan, Over Draft, Import Finance Facility, Stock Finance Facility, Warehousing Facility, Lease Finance Facility.
Purpose: Support Large Agricultural Enterprises for Start-ups and expansion financing needs of N500million up to a maximum of N10billion.
Amount: Minimum of N500million and Maximum of N10billion for a single obligor.
Tenor:
• Maximum of 15 years depending on the complexity of the project
• All loans and advances shall terminate 31st December, 2030
Interest rate: 9%
Security: Any security acceptable to the Bank

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