Farmers and agricultural firms in Nigeria are grappling with a massive debt burden as they struggle to repay N380.97 billion of the Central Bank of Nigeria’s intervention loans by September 30, 2023.
This figure represents the cumulative due and unpaid principal and interest from various agricultural support programmes initiated by the CBN.
Detailed data from the CBN reveals that of the N380.97 billion owed, N362.22 billion constitutes the principal yet to be paid, while the remaining N18.75 billion is accumulated interest.
This information, sourced from the apex bank, highlights the challenges the CBN faces in recouping funds lent out to stimulate agricultural productivity and food security.
The failure to repay these loans could signal underlying issues in the agricultural finance system, which could have implications for the sustainability of such interventions in bolstering Nigeria’s economy.
The CBN’s loan interventions, totalling about N2.07 trillion, were meant to catalyse agricultural development, but the current repayment crisis underscores the need to reassess the strategies employed to ensure that these loans are repaid promptly.
Eight loan programmes for agricultural sector
According to the data from the CBN, at least eight loan programmes were targeted at farmers and agricultural firms. These include:
- Accelerated Agricultural Development Scheme (AADS)
- Private Sector-Led Accelerated Agricultural Development Scheme (PAADS)
- Anchor Borrowers’ Program (ABP)
- Commercial Agriculture Credit Scheme (CACS)
- Maize Aggregation Scheme (MAS)
- National Food Security Program (NFSP)
- Paddy Aggregation Scheme (PAS)
- Rice Distribution Facility (RDF).
Notably absent in the CBN’s disbursement records is the Private Sector-Led Accelerated Agricultural Development Scheme (PAADS), suggesting that funds have yet to be allocated under this particular programme. Furthermore, although the Rice Distribution Facility (RDF) has seen N1 billion in disbursements, there are no records of outstanding balances, implying that the loans are not yet due for repayments.
Breakdown of disbursements and amount due
Here is a breakdown of the data concerning the different agricultural loan schemes and their current financial status:
- The Accelerated Agricultural Development Scheme (AADS) has disbursed a cumulative amount of approximately N21.41 billion, with total principal repayments standing at about N15.28 billion. However, the outstanding principal balance is over N6.12 billion, with due and unpaid principal and interest reaching N872.31 million.
- The Anchor Borrowers’ Programme (ABP), with a massive disbursement of about N1.12 trillion, has seen repayments of about N717.98 billion. The scheme faces a significant gap with an outstanding principal balance of N581.87 billion and due and unpaid principal and interest amounting to N367.06 billion.
- The Commercial Agriculture Credit Scheme (CACS) reports a disbursed total of N756.77 billion, with repayments of N641.52 billion. There remains an outstanding principal balance of N115.26 billion, and the due and unpaid principal and interest are listed at N10.43 billion.
- Under the Maize Aggregation Scheme (MAS), a total of N6.35 billion was released, with repayments almost complete at N6 billion. However, the scheme still has an unpaid principal of N352.5 million and an additional N365.41 million in due and unpaid principal and interest.
- The National Food Security Programme (NFSP)shows a disbursement of N59.09 billion against repayments of N26.82 billion. The programme has an outstanding principal of N32.27 billion and due and unpaid figures reaching N2.24 billion.
- For the Paddy Aggregation Scheme (PAS), out of N106.39 billion disbursed, N104.94 billion has been repaid. The scheme has a minimal outstanding principal amount and a due and unpaid amount of N11.42 million.
The total cumulative amount disbursed across all schemes stands at over N2.07 trillion, with repayments at N1.51 trillion. However, the challenge remains with an outstanding principal balance of N737.33 billion and total due and unpaid principal and interest reaching the staggering sum of N380.97 billion.
More Insights
- The CBN issued credit facilities as part of its development finance interventions in the critical sectors of the economy, especially the agricultural sector. The aim is to improve access to credit, ensure price stability, and support the country’s job creation and economic recovery.
- However, repayment by beneficiaries had been a difficult task, forcing the bank to take extra measures. President Bola Tinubu reportedly directed security agencies to assist the CBN in recovering funds from borrowers, especially under the Anchor Borrowers Programme.
- Also, the CBN suspended new loan applications under its intervention programme. This was as the CBN governor, Yemi Cardoso, noted that some of the previous failures of the CBN were tied to quasi-fiscal activities under the foray of “development finance activities.”
- The CBN recently made a substantial contribution to the agricultural sector by donating over 2 million bags of fertilizers, with a total value of N100 billion, through the Federal Ministry of Agriculture and Food Security to farmers. This move raised questions on whether the apex bank has resumed its suspended intervention programmes.
- However, the bank clarified that the bags of fertilizers donated to the ministry were from the stockpile of a programme initiated by the previous administration, not a new intervention effort.
