IMF Raises Concerns About CBN’s Loans to Farmers, as Many Refuse to Repay

• IMF has highlighted problems with the Anchor Borrowers’ Programme of the Central Bank of Nigeria
• The global bank points explicitly to the fact that there have been low repayment of loans by the farmers that benefited
• Farmers have only been able to repay 24% of the loans disbursed, with the central bank struggling to recover 76% of the loan

The International Monetary Fund (IMF) has disclosed that the repayment of loans within the Central Bank of Nigeria (CBN)'s Anchor Borrowers' Programme (ABP) is low.

In a report titled Nigeria: Selected Issues, the IMF said farmers have only been able to repay 24% of the loans disbursed under ABP as of January 12, 2023.

This means the apex bank is struggling to recover 76% of the loan, which farmers have failed to pay back.

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Part of the report reads:

“The Anchor Borrowers Program established in 2016 initially set aside 40 billion naira to support farmers by offering single digit interest rate loans. Since then, over 1 trillion naira has been disbursed through mid 2022 from this program, with CBN providing a rising share of banking system agricultural financing."

The monetary fund also said one of the problems with the loan recovery is that the incentive structure for repayment is weak, and the disbursed loans don’t target the right recipient.

IMF added

"Repayment is also low at 24 percent for the Anchor Borrowing Program, especially since repayment can be made in kind, limiting the tenor of the loans to one year.

"Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted, and funding is occasionally used for other purchases (e.g., new agricultural input trading companies to elicit trading rents)."

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According to Punch, the IMF also claimed that payback for loans under the Commercial Agricultural Credit (CAC) Plan is low, putting it at 66%.

“Recent data (November 2020) from the central bank indicate that the repayment rate for the Commercial Agricultural Credit (CAC) Scheme is at almost 66 percent but, since the loans started in 2009, this is not a particularly high outcome.”

Report predicts naira exchange rate at N680 to a dollar in 2023

Meanwhile, in another report, a renowned credit agency has made some interesting predictions on critical economic issues facing Nigeria in 2023

The forecast includes the naira-to-dollar exchange rate, economic growth, and inflation rate.

There were also optimistic comments on Nigeria's oil production and price projection for 2023.

Source: Legit.ng