The Central Bank of Nigeria (CBN) has urged banks to actively participate in its Agricultural Credit Guarantee Scheme Fund (ACGSF).
The call was made by the CBN Kano branch Controller, Mr Jino Babangida, during ACGSF’s 2021 “Best Farmer” and “Best Performing Financial “Institution” awards ceremony held at the CBN Kano branch office.
According to him, the guarantee scheme was established by Decree 20 of 1977 and started operations in April, 1978, and that its original share capital and paid-up capital was N100m.
He explained that it was unfortunate that after deregulation of the financial system, banks started to shy away by reducing their loans to the agricultural sector due to the perceived risk in its practice, further revealing that it was based on this that CBN attached to the ACGSF an intervention initiative called Interest Drawback Programme (IDP) which was meant to cushion the effects of interest paid by the beneficiary.
According to him, 40 per cent of the interest was paid as rebate as long as the beneficiary repaid their loan as at when due, noting that the fund was managed by the CBN which handled the day-to-day operations of the scheme.
He further revealed that it was in view of that that the CBN found it very important to award farmers that had accessed the loans and paid as at when due, as well as financial institutions that had excelled in their operations under the scheme, as an encouragement for them to do more and also to encourage wider participation.