The Central Bank of
In a circular released weekend, the CBN announced extension of the tenure of the scheme to 2025, and revised guidelines for its operations.
Previously, loans obtained under the scheme must be repaid within seven years. The CBN under the revised guidelines removed this limit, saying loan repayment period would be determined by the gestation period of the agricultural project being financed.
"Loans shall have a maximum tenure based on the gestation period of the enterprise plus three years cash flow allowance and /or working capital facility of one year with provision for roll over. The scheme allows for moratorium in the loan repayment schedule taking into consideration, the gestation period of the enterprise," the guidelines stated.
Also to allow more agricultural firms to obtain loan through the scheme, the CBN reduced the minimum asset base criteria for corporate borrowers. Previously, only agric firms with asset base of N350 million and above with the prospect to grow the net asset to N500 million in the next three years, can obtain loan through the scheme. These criteria were, however, relaxed under the new guidelines to N100 million and above with prospect to grow the net asset to N250 million in the next three years.
The CBN, however, limited the loan that banks can grant to a single project to N2 billion per bank. "The single obligor for any project from a participating bank under the scheme shall be N2.0 billion while for state governments shall be N1.0 billion."
The Commercial Agricultural Credit Scheme (CACS) was introduced in 2009 in response to yearnings for long-term credit to farmers at low interest rate. According to the CBN, the scheme was established: to fast track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate; to enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
"To reduce the cost of credit in agricultural production to enable farmers exploit the potentials of the sector; To increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis."
The CBN in its 2013 half year report said that, "As at
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