Private sector investors can access up to N2 billion at five per cent interest rate in a new Private Sector-Led Accelerated Agriculture Development Scheme (P-AADS) floated by the Central Bank of Nigeria (CBN).
The fund accessing guideline report said: “The maximum loan accessible under the scheme shall be N2 billion per obligor. The facility shall be repaid from the Economics of Production (EOP) for cultivating on the cleared farmland.
“Interest rate under the intervention shall be 5% per annum (all inclusive) up to 28th February 2021.”
CBN said the loan to be drawn from the Anchor Borrowers Programme (ABP) fund will facilitate increased private sector agricultural production of staple foods and industrial raw materials.
It will also support food security, job creation and economic diversification under the private sector driven scheme.
CBN previously introduced the Accelerated Agriculture Development Scheme (AADS) to engage 370,000 youths in agricultural production with state government states. However, P-AADS will explore the private sector partnership to facilitate more rapid land clearing for production of key agricultural commodities.
Eligible commodities are rice, maize, cassava, cotton, wheat, tomato, poultry, fish, sorghum, oil palm, cocoa, and livestock/dairy.
Participating firms should be processors of agricultural commodities with backward integration policy, prime anchors and commodity associations registered with ABP and other companies and individuals with evidence of ownership of contiguous land for farming.
The guideline also prescribed a six-year loan tenor on annual crops with six months moratorium. Perennial crops have up to 10 years with one-year moratorium.
The collateral to be pledged by participants shall be title of the cleared land and other acceptable collateral prescribed under ABP.
“CBN shall bear 50 per cent of the credit risk in the event of default by the participant,” it stated.