The sorry state to which the Anchor Borrowers’ Programme of the Central Bank of Nigeria has fallen should be a matter of concern to all Nigerians. Many of the beneficiaries of the programme are in default, and efforts by the authorities to recover the loans are meeting brick walls.
From the inception of the programme in November 2015 to early this year, the CBN was said to have disbursed about N1.1 trillion to over 4.2 million smallholder farmers. It said more than N942 billion was due for repayment, with N503 billion repaid and N439b outstanding. The amount outstanding for repayment is said to have risen to about N577 billion currently.
An order issued by President Bola Tinubu to security agencies to recover the money does not seem to have made any headway. However, the borrowers’ antics must not be allowed to prevent full recovery of all the money disbursed under the programme.
ABP, for short, is an offshoot of the vision of the CBN under the former governor, Godwin Emefiele, with express support from then President Muhammadu Buhari, to pursue the development of central banking strategy to drive the growth of the real sector of the local economy. Under this vision enunciated in 2016, the regulator set out to channel funds into the productive sectors by making finance available to them at costs below-market interest rates.
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The development central banking strategy has been successfully implemented in other countries and is seen as part of the economic successes of such countries. As a strategy, it seeks to make use of relatively cheap capital to develop selected sectors of the economy that can in turn act as levers to lift the entire economy through linkage effects.
This preferential treatment using low-interest rates is in part responsible for Japan’s meteoric industrial rise, as it helped in the growth of its big industrial giants. Thus, the CBN set out to implement this vision through intervention funds to selected sectors of the economy in order to accelerate access to funds to them.
In this regard, ABP was conceived by the regulator as a vehicle through which it would fund activities in the Nigerian agricultural sector in ways that bypass the constraints faced by the commercial banks in funding that sector. It covered nine commodities groups comprising about 21 commodities.
This programme, like others, was designed to be administered at the prevailing interest rates for intervention funds, which would be prescribed by the CBN from time to time. Similarly, the tenor of loans was to be based on the gestation period of the target commodity.
The programme has a lot of features embedded in it to ensure that beneficiaries repay the loans when due. For instance, the repayment of loans can be made by the produce or cash, as may be prescribed by the CBN. The loans are also expected to be repaid fully within the tenor of the facility, according to the programme guidelines.
However, it appears now that despite all these provisions, the ABP has gone the way of many such innovative interventions in the economy that failed to produce the desired effects.
Much of this amount now appears to have gone down the drain, with several of the beneficiaries of the programme claiming that they cannot repay the loans, citing various reasons. Many claim that they cannot refund because of losses they allegedly suffered in their business. Some say their farms were flooded and the crops washed away.
This has become a trend in Nigeria, where virtually any programme introduced to improve the way, our economy operates is thwarted by people with dubious intentions. There are reasons to believe that some of the farmers diverted the funds from farming activities for which the loans were given. This is a usual practice in Nigeria, where farmers and indeed, some other operators in other sectors, easily divert bank loans from the core reasons for which such funds are given. Usually, the funds are diverted to finance flamboyant lifestyles, or just taken as the beneficiaries’ share of the ‘national cake’. There are also reports that some officials may have connived with the farmers to divert the funds.
In this ABP case, we are aware there are other sources of the losses or challenges being reported by the participants. Daily Trust, hereby, calls for a thorough investigation into the whole saga surrounding the funds disbursed thus far under the programme. What roles the officials of the CBN, and its subsidiary, the Nigeria Incentive-Based Risk Management System for Agricultural Lending (NIRSAL) played, should be investigated.
Similarly, we need to ascertain what roles the issuance companies that provided cover for the projects played. Did they, for instance, provide early warning signs or red flags on the project as provided in the guidelines? Did they render periodic returns on the farms? If any insurance company is found to not defaulted in its obligations, then they have questions to answer and should be made to do so.
The Central Bank of Nigeria and the federal government must recover the funds and prosecute all offenders.
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