• Wed. Mar 29th, 2023

    How CBN’s ACGS Fund impacts economy, cushions global crises on farmers

    ByBassey Udo

    Jun 30, 2022

    By Bassey Udo

    To promote the quest to attain food sufficiency in the country, the Federal Government, through the Central Bank of Nigeria ACGSF scheme and other development finance interventions has impacted the agricultural sector by providing guarantees to loans to farmers to boost their production capacity.

    Part of the efforts by the apex bank is through the activities of the the Agricultural Credit Guarantee Scheme Fund (ACGSF) established by Decree No. 20 of 1977 specifically to guarantee agricultural credit facilities granted to farmers.

    Under the Fund, the Federal Government and the CBN contribute 60 percent and 40 percent respectively, with the CBN doubling as the Managing Agent of the Scheme and the Secretariat of the ACGSF.

    The Chairman of the Board of the Fund, Stephen Okon, said the scheme also encourages Deposit Money Banks and Microfinance Banks to lend to those engaged in agriculture, by providing guarantees to mitigate risks associated with banks’ lending to agriculture by guaranteeing to pay banks 75 percent of the net amount in default in accordance with the provisions of the enabling Act.

    Reviewing the performance of the Fund on Thursday at the 2021 ACGSF National Best Farmers of the Year Award IN Abuja, Okon disclosed that since inception to May 2022 a total of 1,232,326 loans valued at about N130.903 billion were guaranteed to farmers across the country.

    Out of this number, he said about 973,646 beneficiaries repaid a total of N98.91billion.

    In addition, he said between January and May 2022, the FCT guaranteed a total of 82 loan beneficiaries under the scheme, valued N22.580 million, bringing the total guaranteed loans in the FCT from inception of the scheme in 1978 to May 2022 to 14,258, valued N1.748billion.

    In terms of loan recovery, he said about 11,726 loans valued at about N801.058 million were repaid under the Scheme in the FCT from the inception of the Scheme, with records showing a high level of commitment of the officers in the FCT as well as the determination of the farmers to utilize the scheme to empower themselves and improve their lots.

    “We do hope that before long, participants in the agricultural value chain in the FCT will take advantage of the opportunities provided in the Amended Act,” he said, describing the scheme as a part of the proactive measures to encourage farmers and cushion the impact of the global crises on the economy, while supporting the agricultural sector.

    On the award, Okon said it was the second in the new series since its re-introduction last year, to recognize farmers for utilizing their loans in an efficient manner, and for timely repayment.

    He said the award was also instituted to acknowledge participating financial institutions for their contributions and support to the activities in the Agricultural value chain.

    Apart providing the management of the Fund the opportunity to interact and broaden the public’s knowledge on the ACGSF and create awareness on the recently amended Act of the Scheme, Okon said the award also provided a platform for networking between Board members, participating financial institutions and other relevant stakeholders towards improving the delivery of the objectives of the scheme.

    The ACGSF Best Farmers of the Year Award was introduced in the 1980s to recognize selected farmers that borrowed under the Scheme and repaid within a specified period, while adopting best agronomic practices to achieve good yields every year.

    He said the award was expected to serve as an incentive for participating in the Scheme and inculcating good repayment behaviour in the farmers with a view to encouraging more participants in the Scheme.

    Okon said the award was being held at a time when most economies in the world were experiencing challenges as a result of the Russian-Ukrainian War.

    He said the impact of the war on global oil and food crises was affecting the agricultural sector, resulting in disruptions in domestic food supply chains and other shocks affecting food production.

    This development, he pointed out, has led to the loss of incomes, food security risks, inflationary trends, and creating serious tensions in many countries, including Nigeria.

    Achieving food security, Okon lamented, not only carries significant benefits for human health, but also serves as the basis to achieve sustained economic growth.

    Worried by a potential rise in food insecurity, the Chairman of the ACGSF Board said several countries and organizations were mounting special efforts to keep agriculture safely running as an essential business.

    Since the inauguration of the ACGSF in 2018, Okon said the Board approved the re-introduction of the ACGSF Best Farmers of the Year Awards at the National and State levels.

    While the State Category of the Awards was conducted across the country with FCT, Abuja as host of the event held on June 17, 2022.

    In line with the amended ACGSF Act assented to by President Muhammadu Buhari on June 24, 2019, new strategies were introduced to repackage and reposition the Scheme for greater effectiveness and efficiency, to position Nigeria to become a self–sufficient food producer, creating millions of jobs, supplying key markets across the country and dampening the effects of exchange rate movements on local food prices.

    Also, the new law raised the maximum for a non-collateralized loan from N20,000 to N100,000, while the maximum for a collateralized loan was raised from N10 million to N50 million.

    Again, he said the ACGSF amended showed that complete agricultural value chain financing was now allowed under the Scheme, including the financing of the production of farm machinery, implements and equipment for production, processing, storage and transportation as well as any purpose connected with activities within the agricultural value chain.

    To further encourage participants in the Scheme, the Chairman said the Board last year approved the increase of the Interest Draw Back rebate for farmers and participants in the agricultural value chain from 40 percent to 50 percent with effect from, January 1, 2022, to cushion the effect of the COVID–19 pandemic.

    On the impact of the ACGSF Scheme on agriculture, Okon said it has been relatively successful in de-risking the sector in the country, as evidenced in the number of loans guaranteed from inception to date.

    The Branch Controller of CBN, Abuja, Ogbu Michael, described the ACGSF as not only an important programme of the CBN, but the first Development Finance Intervention scheme to herald the birth of its Development Finance Department (DFD).

    He said the successes achieved under the ACGSF resulted in significant improvement in Deposit Money Banks’ (DMB) lending to the agricultural sector as well as led to a remarkable growth in agri-business value chain in Nigeria.

    The annual Best Farmer Award, he said, was established to recognize the strides by participating farmers under the ACGSF, add visibility to the programme among prospective participants and ultimately signal the CBN’s resolve at ensuring the achievement of food self-sufficiency in Nigeria.

    He said the negative impact of COVID-19 pandemic and the Russian-Ukraine war have disrupted global supply chain, further underscoring CBN’s commitment to intervene in agriculture and other real sector towards insulating the economy from such external shocks.

    He described the award as a demonstration of the CBN’s commitment to supporting hard work, innovation, and productivity in the Agricultural value chain.

    The challenge to farmers, he said, was for them to explore the various agricultural interventions to enhance value addition to their output towards attaining food self-sufficiency, provision of raw materials to the manufacturing industries and also for export, to ultimately assists in diversifying and improving the country’s foreign exchange earnings.

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