Individuals, Agro-processors to access up to N2bn under P-AADS — CBN

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The Central Bank of Nigeria, CBN, yesterday, disclosed that companies, individuals and agro-processors of agricultural commodities would be able to access up to a maximum of N2 billion per obligor under the Private sector-led Accelerated Agriculture Development Scheme, P-AADS.

In the guidelines for the P-AADS, released in Abuja, Director, Development Finance Department of the CBN, Mr. Yusuf Philip, stated that the interest rate under the intervention shall be 5.0 per cent per annum, up to February 28, 2021; while from March 1, 2021, interest on the facility would be nine per cent per annum, all inclusive.

For annual crops, Philip disclosed that the maximum tenor shall be six years with six months moratorium, while for perennial crops, maximum tenor shall be ten years with one-year moratorium.

The collateral for the facility to be pledged by participants under the Scheme, he noted, shall be title of the cleared land and other acceptable collateral prescribed under the Anchor Borrowers’ Programme, ABP.

He said: “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.”

Philip added that the scheme was aimed at exploring private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities.

He noted that the P-AADS was designed to complement the initial Accelerated Agriculture Development Scheme, AADS, which was targeted at addressing the food security and youth unemployment challenges across the country.

He explained that the AADS was aimed at engaging 370,000 youths in agricultural production, in collaboration with state governments.

However, he stated that 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.

He said: “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 states;

“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 materials; 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.”

He listed eligible participants in the scheme to include agro-processors of agricultural commodities engaged in backward integration; 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 commodities.

The agricultural commodities eligible for consideration under the Scheme, according to him, are rice, maize, cassava, cotton, wheat, tomato, poultry, fish, sorghum, oil palm, cocoa, livestock/dairy, and any other commodities as may be listed by the CBN from time to time.

To be eligible for the P-AADS, Philip said the prospective participants must be existing or new firms engaged in agricultural production with proven capacity and bankable proposal, 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 clearing.

He explained that the CBN provide the fund, act as Managing Agent, issue and review modalities and operating guidelines from time to time; provide regulatory and supervisory oversight; monitor, evaluate and conduct impact assessment of the programme In conjunction with other stakeholders and provide periodic reports on the programme.

On the other hand, he stated that the participating banks shall conduct due diligence on prospective participants; access funds from the CBN for on-lending; 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 and monitor the utilisation of the facility to ensure achievement of the objectives of the scheme.

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