Recently, the presidency directed some security agencies to recover N577 billion being outstanding refunds from participating financial institutions, corporate entities, farm associations and other beneficiaries of the Anchor Borrowers Programme (ABP) funded by the Central Bank of Nigeria (CBN). The security agencies have up to September 18 to recover the loans owed mostly by banks, farmers, individuals, state governments and other financial institutions.
The CBN had disbursed a total of N1.1trillion since November 2015 when the ABP was launched to create economic linkage between small-holder farmers and reputable companies known as anchors. The ABP, an intervention programme to boost food production, was established in line with the CBN developmental functions enshrined in Section 31 of the CBN Act 2007.
Out of the over N1trillion spent on the programme, only N546billion was repaid. This represents 52. 4 per cent of the loans given to the beneficiaries. About N255billion was allegedly diverted by those involved in the funds’ disbursement, including state governments, commercial banks and micro finance houses.
While we laud the government’s plan to recover the unpaid loans from the ABP, we condemn the financial malfeasance that trailed the disbursement of the loans. It is unfortunate that non-farmers were reportedly given the loans. The recovery process of the loans should be transparent.
The CBN and the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) reportedly supervised the disbursement of the loans. Under the ABP, the smallholder farmers cultivated over 6 million hectares of 21 commodities across the country. The commodities included rice, wheat, cowpea, millet, maize, cotton, fish, soya bean, poultry, cassava, groundnut, ginger, sorghum, oil palm, cocoa, sesame seeds, tomato, castor seed, yellow pepper, onions and livestock.
Although the programme has helped to improve the national average yield per hectare of these commodities, the repayment of the loans has been abused, with many defaulting. According to the CBN, repayments under the ABP are made through cash or produce by the beneficiaries within an agreed term as stipulated in the collateral.
Each smallholder farmer is entitled to a maximum limit of 50 per cent of the value of his collateral. Tenor of loans under the credit scheme is also based on the commodity gestation period. About 12 million smallholder rice farmers represent the largest beneficiary of the total loans disbursed under the scheme.
The beneficiaries of the loans were granted a forbearance, an extension of the repayment to February 28, 2022 as a result of the outbreak of COVID-19 pandemic in 2020 that disrupted lives and livelihoods, including farming. According to a recent report by the International Monetary Fund (IMF), the ABP has not significantly boosted food production in the country. It further says that the repayment of the loans would have been more encouraging if the recipient loans had been well targeted and worked out properly.
Figures from the CBN showed that out of the N1.1trillion loan disbursed, N73.99 billion was to support the cultivation of over 383,000 hectares of maize, rice and wheat during the 2022 dry season. The CBN said it released the sum of N1.76billion to finance two large-scale agricultural projects under the Commercial Agricultural Credit Scheme (CACS).
According to the template for the loan, excess output from the farmers are to be released to the Nigeria Commodity Exchange (NCX) to help moderate the prices of food in the market. Yet, food prices have continued to soar across the country. This has posed serious challenge to the nation’s food security. Beyond the recovery of the loans, there is need to review the objectives of the ABP in such a way that the repayment of the loans will be timely.
We believe that the prompt repayment of the ABP loans will strengthen the CBN and other financial institutions involved to finance the real sector, especially, the agricultural sector and drive government’s food security and economic growth. The beneficiaries of the ABP loans should not see the intervention programme as a bazaar. The fact that a large number of the beneficiaries have not repaid the loans is counter-productive. It vitiates the main goal of the ABP.