The agriculture credit loan is a bank-guaranteed credit facility that extends up to 75% of the amount in default, net of any security realized, to farmers. The credit loan is managed by the Central Bank of Nigeria, which is also in charge of the Scheme’s day-to-day operations. The Guidelines define the types of businesses that are eligible for guarantees under the Scheme.
The Objectives of the CBN Agriculture Credit Loan
The CBN Agriculture Credit Loan is aimed at achieving the following objectives:
- To accelerate the development of the Nigerian economy’s agricultural sector by providing finance to commercial agricultural firms at a single-digit interest rate;
- Improve national food security through increasing food supplies and lowering agricultural produce and product prices, resulting in low food inflation;
- Reduce the cost of finance in agricultural output to allow farmers to fully utilize the sector’s potential;
- On a long-term basis, boost output, create jobs, and diversify revenue streams, increase foreign exchange earnings, and offer input to the industrial sector.
Eligibility Criteria for Corporate and Large-Scale Commercial Farms/Agro-Enterprises
In order to qualify for the CBN Agriculture Credit Loan, the following criteria must be met by Limited Liability Companies:
- Minimum asset base of N100 million and the potential to develop net assets to N250 million in the next three years;
- Compliance with the Company and Allied Matters Act (1990);
- Have a well-thought-out business strategy;
- Provide up-to-date records on business activity if applicable;
- Establish an out-growers program if applicable;
- Comply with all of the lending bank’s standards.
Eligibility Criteria for Medium-Scale Commercial Farms/Agro-Enterprises
The borrower must meet the following requirements in order to participate in the CBN Agriculture Credit Loan:
- Minimum asset base of N50 million with the potential to develop net assets to N150 million in the next three years;
- Compliance with the Company and Allied Matters Act (1990);
- Have a well-thought-out business strategy;
- Maintain up-to-date records on the company’s operations;
- Establish an out-growers program if applicable;
- Comply with all of the lending bank’s standards.
Application Process for the CBN Agriculture Credit Loan
- All CBN Agriculture Credit Loan applications must be submitted to participating banks. Participating banks are required to treat all Scheme applications with due diligence;
- The Loans will have a maximum tenor of one year, based on the enterprise’s gestation period/or working capital facility, with rollover provision;
- The CBN Agriculture Credit Loans program allows for a pause in the loan repayment schedule, taking into account the enterprise’s gestation period.
For further information, you can obtain a PDF copy of the CBN Agriculture Credit Loan guidelines.
Source: Nyscinfo
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