In its efforts to further enhanced credit supply to the agricultural sector, the Central Bank of Nigeria gas reviewed strategy towards the implementation of the Commercial Agriculture Credit Scheme (CACS).
Following the review, the apex bank has approved the extension of the CACS terminal date from September 2016 to September 2025. The apex regulator also gave approval for the revise of the CACS guidelines for operations of the scheme effective May 14, 2014.
The CBN in its guideline obtained from its website said that the scheme shall be financed from the proceeds of the N200 billion three – year bond raised by the Debt Management Office (DMO).It further said that the fund shall be made available to the participating banks to finance commercial agricultural enterprises.
In addition, it said each state government could borrow up to N1.0 billion for on-lending to farmers’ cooperative societies and other areas of agricultural development provided such initiatives/interventions are in line with the objectives of CACS.
It stated that the scheme was set to fast track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate, enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
The scheme aimed at reducing the cost of credit in agricultural production to enable farmers exploit the potentials of the sector; and increase output, generate employment, diversify the revenue base and increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.
It described a commercial enterprise as 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.
Companies expected to borrow from the scheme are corporate and large scale commercial farms/Agro-enterprises, medium scale commercial farms/Agro-enterprises and state government /Federal Capital Territory.
The modalities for the Scheme according to CBN is that agricultural credit from the participating banks shall be in the form of loans, interest on loan shall not exceed 9.0% inclusive of all charges and all loans and overdrafts shall terminate on September 30, 2025.
