News Column

CBN Records N53.8 Billion Fully Repaid Agriculture Loans

September 4, 2014

Chijioke Nelson

THE Agricultural Credit Guarantee Scheme of the Central Bank of Nigeria (CBN) recorded N53.8 billion fully repaid loans in August 2014, out of the N79.3 billion granted to farmers since inception.

The fully repaid loans covered 679,408 of the 906,845 projects since the inception of the scheme in 1977.

Specifically, in the month of August, 5,313 loans valued at N755.504 million was fully repaid under the scheme, against 3,538 loans valued N553.891million that was recovered in July 2014.

ACGS was established to provide 75 per cent guarantee for loans granted to the agricultural sector by banks, as it bears 75 per cent of any outstanding default balance to the bank after the security pledged has been realized.

During the period under review, 5,239 loans valued N769.999 million was granted by two Deposit Money Banks (DMBs) and 40 microfinance banks, compared to 6,652 loans valued at N1.144 billion guaranteed in July, 2014.

This showed a decrease of 1,413 loans or 21.24 per cent and N374.418 million or 32.72 per cent in number and value respectively.

The 6,652 loans valued at N1.144 billion in July, contrasted 8,251 loans valued at N1.472 billion guaranteed in June, 2014, which showed a decrease of 1,599 loans or 19.38 per cent and N328 million or 22.28 per cent in number and value respectively.

Further analysis of the report showed that among the number of loans guaranteed, Taraba State emerged highest with 1,744 loans (33.29 per cent), valued at N296.340 million (38.49 per cent).

This was followed by Katsina State with 748 loans (14.28 per cent), valued at N82.430 million (10.71 per cent), while Edo State trailed with 555 loans (10.59 per cent), valued at N59.525 million (7.73 per cent).

The report also showed that in July, Niger State was the highest with 905 loans (13.60 per cent), valued at N46.600 million (4.07 per cent), followed by Adamawa State, with 902 loans (13.56 per cent), valued at N140.308 million (12.26 per cent), while Delta State came third with 690 loans (10.37 per cent), valued at N145.190 million (12.69 per cent).

The breakdown of the disbursements by the banks revealed that Diamond Bank Plc granted a loan valued at N9.5 million, while Union Bank of Nigeria granted 1,855 loans valued at N437.91 million.

Also, 40 microfinance banks granted 3,383 loans valued N322.6 million under the ACGS in the review period.

In July, three banks granted 1,754 loans valued at N645.029 million under the ACGS as the breakdown of the disbursements showed that First Bank of Nigeria granted 375 loans valued at N171.499 million.

Keystone Bank limited followed with 150 loans valued at N31.500 million and Union Bank of Nigeria trailed with 1,229 loans valued N442.030 million.

However, 46 microfinance banks granted a total of 4,898 loans valued N499.4 million under the ACGS in the review period.

The distribution of number of the loans guaranteed by purpose indicated that food crops accounted for 4,792 loans (91 per cent), followed by 'others' and livestock, which recorded 231 loans (four per cent) and 118 loans (two per cent) respectively.

Meanwhile, N2.4 billion was released from the Commercial Agriculture Credit Scheme (CACS) Repayment Account to four participating banks for four projects in August 2014, which were made up of three new projects and one enhancement.

CACS was scripted to finance large ticket projects along the agricultural value chain and administered at a single digit rate of nine per cent to beneficiaries for a period of seven years, which has been extended by to 2025.

State governments, including the FCT can access a maximum of N1 billion each for on-lending to farmers' cooperatives or other areas of agricultural intervention.

Already, 316 beneficiaries made up of 285 private promoters and 31 state governments' projects have been sponsored under CACS, while 30 state governments and the Federal Capital Territory have accessed N43 billion.

Under the scheme, N2.013 billion was repaid by one bank in respect of two projects during the month, bringing the total repayment to N42.814 billion in respect of 84 projects.

However, no bank was sanctioned for infraction on the CACS guidelines during the month, while total penalty on banks for infractions stood at N1.24 billion from inception in 2009 to date.

Analysis of CACS performance by value chain showed that out of the 285 CACS private sector sponsored projects (from both Receivable and Repayment accounts), production dominated the activities funded with 50.53 per cent, followed by processing, which accounted for 38.95 per cent, while marketing, storage and input supplies accounted for 5.61 per cent, 4.56 per cent and 0.35 per cent respectively.

In terms of the volume of funds released, processing accounted for 49.4 per cent, followed by production, which accounted for 35.5 per cent, while marketing, storage and input supplies accounted for 10.7 per cent, 4.1 per cent and 0.3 per cent respectively.

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Source: AllAfrica

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