Banks under the Central Bank of Nigeria’s (CBN) Commercial Agriculture Credit Scheme (CACS) have refunded N387.2 billion to the apex bank. The refund is a part payment of the N622 billion disbursed to finance commercial agricultural enterprises with single-digit interest loans of not more than 9 percent.
The scheme is one of CBN’s projects on agriculture that seek to initiate rapid expansion in the Agric sector and eradicate food insecurity in the country. CACS has made it easy for farmers to access loans from commercial banks that operate under it. Its interest rate makes loan repayment more flexible for farmers and enterprises in the Agric value chain.
In a telephone interview with Ventures Africa, Joseph Bello Imokhai, ICT professional and Director of Imokhai Farmers Initiative stated that “it is easy for farmers to pay back loans because the loan plan gives them a longer period to repay, is more flexible, interest rates are not as high as it used to be and the loans are non-collateral.”
He added that since his company began to “assist uneducated farmers and Agric businessmen to access loans, monitoring their production and ensuring profitable sales, none of them has defaulted in repaying the loans because they don’t even feel it when the banks do their deductions.”
The scheme has also helped in mitigating the struggles and risks that threaten the business growths of farmers and Agric entrepreneurs. Commenting on the impact of the scheme, Tola Odumosu, an Agric entrepreneur and Chief Executive of Teecan Enterprises told Ventures Africa that “the CACS loan has helped farmers deal with the struggles to buy lands, buy farm products and purchase equipment.”
“The farming business comes with a huge risk and in order to avoid losses, the scheme does a routine check on the farms or Agric enterprise to know whether their business models have the capacity to make profits and payback the loan before granting the loans to them,” Odumosu added.
Since the commencement of CACS, there has been a massive increase in outputs in the Agric sector as farmers invest more capital in their businesses. The increased output has triggered healthy competition in the sector with farmers and traders employing innovation and creativity in the sector with aims to generate more sales. This has equally resulted in an increase in employment in Nigeria. According to the CBN, over 1.13 million jobs have been created along the various agricultural value chains.
Isaac Okorafor, the Director of Corporate Communications Department, CBN, explained that the impact of CACS on employment was made possible because it provided credit facilities to commercial agricultural enterprises at a single-digit interest rate. This is an indication that the scheme was successful. Okorafor also stated that the utilisation of agro-allied companies has increased through various interventions by the CBN in the sector.
The Nigerian Agric sector accounts for 21 percent of its Gross Domestic output (GDP). Even though oil brings a bulk of its foreign earnings, 70 percent of its population is engaged in agricultural production at a substantial level.