In a circular date Feb. 16, The Central Bank of Nigeria (CBN) says it has revised the guidelines for Commercial Agriculture Credit Scheme (CACS), to include Non-Interest Financial Institutions (NIFIs).
About the Commercial Agriculture Credit Scheme (CACS)
As part of its developmental role, the Central Bank of Nigeria (CBN) in collaboration with the Federal Ministry of Agriculture and Water Resources (FMA&WR) established the Commercial Agriculture Credit Scheme (CACS) in 2009 to provide finance for the country’s agricultural value chain (production, processing, storage and marketing). Increased production arising from the intervention would moderate inflationary pressures and assist the Bank to achieve its goal of price stability in the country. The primary objectives of the Scheme are to:
- Fast-track the development of the agricultural sector of the Nigerian economy by providing credit facilities to large-scale commercial farmers at a single digit interest rate;
- Enhance national food security by increasing food supply and effecting lower agricultural produce and products prices, thereby promoting low food inflation;
- Reduce the cost of credit in agricultural production to enable farmers exploit the untapped potentials of the sector; and
- Increase output, generate employment, diversify Nigeria’s revenue base, raise the level of foreign exchange earnings and provide input for manufacturing and processing on a sustainable basis.
The Scheme which is a sub-component of the Federal Government of Nigeria’s Commercial Agriculture Development Programme (CADP) is financed through a N200billion Bond raised by the Debt Management Office (DMO). Loans to eligible entities under the Scheme are disbursed at a maximum interest of 9 percent. The subsidy arising from this stipulated rate and the market rate on all loans granted, and the administrative expenses of the Scheme are borne by the Central Bank of Nigeria (CBN).
According to the circular, the review was part of bank’s efforts to deepen access to finance and reduce exclusion rate.
It added that the CBN would look at the possibilities of revising guidelines for other intervention funds to the interest of the public.
“It is expected that the review of the guidelines for other intervention funds will follow in due course.
“Please note that the CBN will continue to review the guidelines for other intervention funds currently managed by the bank to factor the needs of the non-interest banking public.”
The News Agency of Nigeria (NAN) reports that the scheme is aimed at fast tracking the development of the agricultural sector by providing credit facilities to large scale enterprises with a minimum asset size of N50 million at a single digit interest rate of 9 per cent.
The scheme also targeted at enhancing national food security by increasing food supply in the country.(NAN)
For more information on the Commercial Agriculture Credit Scheme (CACS), visit the official CBN CACS document