Farmers raise concerns as CBN suspends Anchor Borrowers loans

Farmers and other stakeholders in the agricultural sector are expressing concern over the suspension of agricultural loans accessed through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) by the Central Bank of Nigeria (CBN) recently.

NIRSAL, a US$500 million non-bank financial institution wholly owned by the Central Bank of Nigeria (CBN), was established in 2013 to catalyse the flow of finance and investments into fixed agricultural value chains and de-risk agric lending across the country to achieve food self-sufficiency and economic diversification.

It handles most of the agric loans to farmers by the CBN, especially its popular Anchor Borrower Programme (ABP).

Now, the apex bank has said it suspects fraudulent activities in NIRSAL loans under the ABP and ordered for the suspension of such loans until all previously beneficiaries have paid back.

It is not yet clear if the suspension is on the CBN Anchor Borrowers Programme alone or also includes those of Micro finance banks through NIRSAL.

The suspension has grounded loan activities in NIRSAL and farmers are worried that, among others, the timing was wrong, as many of them have already gone far with plans to expand their agricultural production.

A farmer, Remini Femi, who appeared visibly worried said “what’s happening now is economically threatening” and called on the CBN to “please step in and save millions of Nigerians to access these loans for agricultural production.”

Many farmers waiting for NIRSAL disbursement through their social media handle expressed sadness over the suspension of the loan facility as it threatened to ground their dreams for expansion.

Reacting to the development in a chat with our Agric Editor, the leadership of the All Farmer Association of Nigeria, headed by Architect Kabiru Ibrahim, said though the CBN blames NIRSAL in the non-performance of the ABP, it should do the needful in fishing out those responsible. It should continue to provide qualified farmers the much-needed support.

“We urge the CBN to do due diligence in prequalifying farmers who participate in the programme because several cases of briefcase farmers who pose as real farmers abound. These collude with some NIRSAL officials to defraud the programme.

“Timely repayment which is not forthcoming in the ABP is largely due to this fraud. Anyone who gives bribe to take a loan with an interest component has no desire to repay it.

“Our initial understanding of the role of NIRSAL was to primarily incentivize commercial banks to embrace lending for agricultural production but certainly not to prequalify prospective loan seeking companies. This is how corruption took over and the farmers are now the worse for it.

“We call on the CBN to reverse its decision on the disbursement of the ABP support to farmers,” he said.

Similarly, Dr Femi Oke, AFAN chairman, South-west Zone, said the suspension of the NIRSAL loans would greatly impact food production in the country.

Oke, speaking to the News Agency of Nigeria (NAN), in Lagos, urged the CBN to investigate the allegations against NIRSAL without undermining the various efforts of farmers toward achieving food security and self-sufficiency.

He called on the CBN to resolve the issues surrounding the suspension of the NIRSAL loans to farmers, so as to avert impending food crisis.

The AFAN official said many farmers were disappointed by the sudden suspension of the Anchor Borrowers Programme (ABP) and NIRSAL loans, as they provided a lot of support to smallholder farmers.

The CBN recently suspended all loans disbursed by NIRSAL, following widespread allegations of corruption by its officials, NAN also reported.

The CBN’s suspension of further disbursement of loans by NIRSAL to farmers was contained in correspondence of March 10, following the Feb. 24 meeting where the decision to pause further loan disbursements was reached.

The memo said the decision would only be reversed after all outstanding loans disbursed to farmers through NIRSAL were paid.

According to Oke, “when we heard about the suspension of NIRSAL loans, we knew immediately that this is not good for the farmers and the sector.

“From what we heard, the suspension is based upon the ABP.

“We want CBN to lay more emphasis on how it will go about it because some of the farmers have done their interview on NIRSAL loans, while others are awaiting disbursement of the funds.

“What will be their fate now? This is not good and we implore government to look into the issue and address it,” he said.

Oke urged the federal government to intervene, in order not to jeopardise the efforts of farmers that have already invested in their farms, and those already waiting for the loans to enable them to prepare for the planting season.

“Something needs to be done immediately in order not to jeopardise the effort of the farmers that are still ready to go back to the farm.

“Very many farmers, specifically in the South-West, are waiting for the loan and they expect that by now it should have been disbursed.

“Very few of our members have been able to access the loan, a very large number have not even gotten access to the interview.

“I have also not done the interview myself. I am still waiting to be selected. Farmers are not happy about the suspension of the loan,” he stressed.

The AFAN chairman said even the NIRSAL selection process had been slow due to the COVID-19 pandemic, such that “only about 10 per cent of our farmers have benefited from the loan.

“We want the federal government to clarify if the suspension is on the CBN Anchor Borrowers Programme alone and on the Microfinance bank through NIRSAL,” he said.

There is no immediate reaction from the management of NIRSAL over the suspension of the loans as an official, who craved anonymity, said only the CBN can talk on the matter and it has spoken.

Sources at the apex bank said the suspension was to ensure efficiency in the system and assured farmers of the bank’s commitment to guarantee food security.