Transcript INVESTING IN THE NIGERIAN CAPITAL MARKET BY I. M …

ORGANISED PRIVATE AGRICULTURAL
SECTOR (OPAS) AND THE PROVISION OF
N200 BILLION PUBLIC FUNDS FOR
COMMERCIAL AGRICULTURE IN NIGERIA
by
MR. JOE ALEGIEUNO
Director
Development Finance Department
Outline of Presentation
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Introduction
Objectives of CACS
Target Agricultural Commodities
Funding
Management
Eligibility for Participation
Modalities & Tenor
Acceptable Collateral
Procedure For Applying for the Loan
New Developments
INTRODUCTION
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As part of its developmental role, the Central Bank of
Nigeria in collaboration with the Federal Ministry of
Agriculture and Water Resources (FMA&WR), has
established the Commercial Agricultural Credit
Scheme (CACS).
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The scheme was created to promote commercial
agricultural enterprises in Nigeria, which is a subcomponent of the Federal Government of Nigeria
Commercial Agriculture Development Programme
(CADP) being anchored by the Federal Ministry of
Agriculture and Water Resources (FMA&WR).
INTRODUCTION CONT’D
CACS was also introduced to complement
other initiatives of the Bank aimed at
providing
funding
for
agricultural
development. Such initiatives as the
Agricultural Credit Guarantee Scheme
(ACGS) which is for small and medium scale
farmers, Interest Draw-back Programme and
Agricultural Credit Support Scheme (ACSS),
etc.
OBJECTIVES OF CACS
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To fast track development of the agricultural sector of
the Nigeria economy by providing credit facilities to
commercial agricultural enterprises at single digit
interest rate.
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To enhance national food security by increasing food
supply and effectively lower the prices of agricultural
produce and products, thereby promoting low food
inflation.
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To reduce the costs of credit in agricultural production
and enable farmers exploit the full potentials of the
sector.
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To increase output, generate employment, diversify the
revenue base of the economy, increase foreign
exchange earnings and provide input for the industrial
sector on a sustainable basis.
TARGET AGRICULTURAL COMMODITIES
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Cash crops: cotton, oil palm, rubber,
Jatropha carcus, sugar cane
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Food crops: Rice, maize, cassava,
wheat, fruits and vegetables.
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Livestock: dairy, poultry and piggery.
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Fisheries.
MOBILIZATION OF FUNDS FOR
THE SCHEME
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An MOU to enable the Debt Management Office
(DMO) raise N200.0 billion was signed on
August 28, 2009.
The DMO had provided N100 billion.
The DMO is expected to raise the balance of
N100 billion to be disbursed to the CBN in two
more installments between September and
October, 2009
FUNDING
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The N200 billion being raised by the DMO
shall be in two tranches.
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The first tranche envelope of N100 billion
had been released to the participating banks,
United Bank for Africa Plc. (N75billion) and
First Bank of Nigeria Plc. (N25 billion)
representing 50% of the Fund.
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The second tranche will be released to new
banks that will be brought under the Scheme
in the nearest future.
MANAGEMENT
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CBN and the FMA&WR collaborate to ensure the
success of the programme.
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Day to day implementation of the Scheme, the
Development Finance Department of the Central
Bank and Technical Implementation Committee
(TIC) headed by Director Development Finance
Dept.
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The Secretariat of TIC is located in the Secretariat of
the Commercial Agriculture Development
Programme (CADP) of the FMA&WR. TIC reports to
the Project Steering Committee (PSC) which is the
highest policy organ.
MANAGEMENT CON’T
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The PSC meets quarterly to review progress,
consider proposals from the Technical
Implementation Committee (TIC) and make
changes if required in the running of the
programme, give approvals and is responsible
for the overall direction of the Scheme.
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Credit support to the target commodities and
sub-sectors would be administered along the
entire value chain of; Production, Storage,
Processing, Market and Enterprise
Development.
ELIGIBILITY CRITERIA FOR
PARTICIPATING BANKS
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Liquid assets
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Branch network
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Agricultural lending infrastructure
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Total assets
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Agricultural lending experience
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Supplementary credit to augment agricultural
finance
ELIGIBILITY FOR PARTICIPATION
FOR PROJECTS (CHECKLIST)
Not less than N350 million for an
integrated farm with prospects of growing
the assets to N500 million within the next
three years
 N200 million for non-integrated farms/
agro-enterprise having the prospect to
grow the net asset to N350 Million in the
next three years .
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ELIGIBILITY FOR PARTICIPATION FOR
PROJECTS (CHECKLIST)
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Be a limited liability company and complies
with the provision of the Company and
Allied Matters act (1990).
Have a clear business plan.
Provide up-to-date record on the business
operation, if any.
Have out growers programme, where
appropriate.
Satisfy all the requirement specified by its
lending Bank.
ELIGIBILITY FOR PARTICIPATION FOR
PROJECTS (CHECKLIST)
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Applicants that meet the pre-qualification criteria
would then be required to:
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Meet all the conditions precedent to loan
disbursement by the participating banks (PB).
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An encouraging aspect of this Scheme is a 40% grant
component that will be provided by the Federal
Government to successful applicants, depending on the
project.
MODALITIES & TENOR
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Agricultural loans to be granted shall not
exceed 9% per annum interest rate,
inclusive of all charges
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Loans under the CACS shall be for a
maximum tenor of seven (7) years.
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The working capital facility shall be for
one year with provision for roll-over. The
Scheme also allows for the moratorium in
the repayment of loans.
ACCEPTABLE COLLATERAL
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A charge on land in which the borrower holds a
legal interest or
A right to farm, or a charge on the land including
fixed assets,
crops or livestock.
A charge on the movable property of the borrower.
A life insurance policy, a promissory note or other
negotiable security
Stocks and shares
Any other collateral acceptable to the participating
banks.
Note that PBs take all credit risks under the Scheme
PROCEDURE FOR APPLYING
FOR THE LOAN
All applications for loans under the
scheme shall be made to the PBs
in duplicates.
 One copy of which will be stamped by the
PB concerned and forwarded to the
Development Finance Department of CBN
and CADP Secretariat of the FMAWR.
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NEW DEVELOPMENTS
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States are no longer to participate under the Scheme
as a result of their un-preparedness to issue ISPO
that will enable their smallholder farmers borrow
under the Scheme.
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FMA & WR, is to develop 385 Farm Nucleus Estates
(FNEs) in every two local governments in the
country. This component is expected to commence
with 24 pilot projects.
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The FNEs are expected to attract a new generation
of entrepreneurs to engage in farming as a business,
generate employment, minimize rural-urban
migration, and consolidate farms, farmers and
farming requirements within the estate to leverage
on economies of scale and market linkages.
NEW DEVELOPMENTS (Cont’d)
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Each FNE will occupy 2,000-3,000 hectares of
land (to be provided by the State Governments
with built up infrastructures), accommodated
farmers would be organized into production
clusters, input suppliers and marketers so as to
enjoy subsidized inputs, foster relationships
themselves,
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FNEs will also have access to storage and
processing facilities, and physical and virtual
markets (commodity exchange).
ACHIEVEMENTS
Details of Applications
Considered
UBA Plc.
No.
(a) Applications received 85
(b) Total Number of “No
Objections Issued”
Value (N)
161,465
43
70,470.10
FBN Plc.
No.
TOTAL
Value (N)
No.
Value (N)
131,222.31
208
292,687.71
57
36,373.50
100
106,843.60
123
(c) Breakdown of “No
Objections Notes” into
investment areas.
- Processing
- Production
36
47,370.10
43
31,928.80
79
79,298.90
7
23,100.00
14
4,444.70
21
27,544.70
THE END
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