Funding options for agriculture in Nigeria expands with N50bn scheme

 The Agricultural Credit Guarantee Scheme (ACGSF) Amendment Act assented to by President Muhammadu Buhari increased the share capital of the fund from N3 billion to N50 billion. The new scheme is in line with Central Bank of Nigeria’s (CBN’s) move to increase lending to the agricultural sector and support increased food production. The fund provides a guarantee for bank loans for agriculture and boost lending to agriculture. Financing of production farm machinery, production equipment, processing, storage and transportation are now allowed under the amended ACGSF Act, writes COLLINS NWEZE.

Before now, farmers were the least that banks would consider for loans. Such loans, if approved, were deemed lost from the outset, especially when advanced to smallholder farmers.

Today, the story is different. Both the smallholder farmers and established ones can take a shot at bank loans. Also, lenders, which previously saw agricultural loans as high risk, are now seeing the potential of how much a well-priced credit can add to their balance sheets and profitability. The amendment of the Agricultural Credit Guarantee Scheme (ACGSF) Bill raised share capital of the fund from N3 billion to N50 billion, a step that allowed more farmers to access agricultural loans.

A breakdown of the ACGSF Amendment Act 2019 shows that the sharing ratio is Federal Ministry of Finance (60 per cent) and Central Bank of Nigeria (40 per cent). The maximum for a non-collaterised loan under the scheme is now N100,000.00, the maximum amount for collaterised loan granted to individuals, cooperative societies and corporate entities is now N50 million, up from N10 million.