The Central Bank of Nigeria (CBN) has announced a new Agric credit scheme with funding provided through the Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS).
It said commercial banks in Nigeria have been authorized to start offering specialised loans to youths interested or operating agricultural business. The Agric loan comes with it own requirements and business-type.
Applicants can obtain maximum of NGN2 billion from the funds as the CBN predicts that with the utilisation of P-AADS, there will be increase in private sector agricultural production of staple foods and industrial raw materials, as well as support food security, job creation and economic diversification.
“The @cenbank has authorised commercial banks to give up to N2 billion maximum loan to youths interested in going into agriculture, under the Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS),” the Federal Government shared in a tweet.
Information You Should Know
Interest Rate: Interest rate under the intervention shall be 5.0% p.a. (all inclusive) up to 28th February 2021. Interest on the facility from 1st March 2021 shall be 9% p.a. (all inclusive).
Loan Tenor: Annual crops have a maximum tenor of six (6) years with six (6) months moratorium while perennial crops have a Maximum tenor of ten (10) years with one-year moratorium.
Collateral Requirement: The collateral to be pledged by participants under the Scheme shall be title of the cleared land and other acceptable collateral prescribed under the ABP. CBN shall bear 50% of the credit risk in the event of default by the participant.
Repayment: Repayment of the facility shall be made on instalment basis through the participating banks and spread over the EOP of the cultivated commodities. The participating banks shall remit repayments received to the CBN on quarterly or annual basis depending on the commodity financed.
Requirements To Access The N2bn Agric Fund
You must be Eligible. These includes:
- 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
iii. Other companies and individuals with evidence of ownership of contiguous land readily available for clearing and cultivation of agricultural commodities.
Prospective P-AADS 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;
iii. 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.