CBN Disagrees With IMF Over N1 Trillion Loans to Farmers, Shows Evidence to Support Its Position
- The Central Bank of Nigeria does not agree with the IMF's poor rating of its loans to farmers
- Data shows the CBN has provided over N1 trillion in loans to farmers through its Agriculture Anchors Borrowers programme
- The dispute between the CBN and IMF highlights differing perspectives on the best approach to agricultural financing in Nigeria
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The Central Bank of Nigeria (CBN) has disclosed that N503bn, representing 52.39% of loans disbursed, has been repaid by farmers under the Anchor borrowers programme as of February 2023.
This was made known by Isa AbdulMumin, CBN's acting director of the Corporate Communications Department.
Source: UGC
However, this number conflicts with the assertion by the International Monetary Fund that just 24% of loans given out through the CBN's Anchor Borrowers' Programme have been settled.
The report highlighted that while the CBN allows farmers to make repayments in produce or money under the ABP, the actual repayments have been exceedingly low.
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The document read:
“ The repayment rate for the Anchor Borrowing Programme is only at 24%, which is particularly concerning given that the loans can be paid back in produce, thereby shortening the repayment period to just one year."
The report also suggested that one of the reasons for the low repayment rate is the weak incentive system in place, inadequate targeting of loan recipients, and instances where the funding is diverted to other purchases, such as setting up new agricultural input trading firms to collect trading fees.
CBN reacts to IMF claims
Isa, the spokesperson for the CBN, dismissed the claims made by the IMF about the ABP.
He confirmed that N1.079 trillion had been released under the program, with N503 billion already repaid, leaving an outstanding payment of N960 billion.
He further explained that 4.45 million smallholder farmers had benefited so far in the programme, cultivating over 6.02 million hectares of 21 different commodities across the country, Punch reports.
Furthermore, citing data from the Food and Agriculture Organisation, Isa stated that the ABP has significantly contributed to the national output of focal commodities, with maize and rice production peaking at 12.2 and 9.0 million metric tonnes in 2021 and 2022, respectively.
Isa also clarified that the outstanding balance on loans is still under moratorium, as the CBN granted COVID-19 forbearance to beneficiaries of the apex bank’s interventions in March 2020, extending it to February 28, 2022.
Additionally, he noted that the loan tenor under the ABP is based on the commodity gestation period, with loans granted to farmers cultivating some perennial crops having up to a seven-year tenor.
Isa affirmed that the CBN remains committed to its developmental mandate of promoting access to finance for the real sector, particularly agriculture, to support the Federal Government’s drive for food security and economic growth.
CBN threatens to arrest Anchor Borrowers loan defaulters
Meanwhile, recall that a while ago, Legit.ng had reported that the CBN had threatened to arrest farmers who had failed to repay loans.
The CBN reiterated that it would no longer tolerate defaulting on loans as it has found out that some farmers thought the loans were gifts from the government.
The CBN stressed that delay or non-repayment of loans makes it difficult for the apex bank to continue the programme and reach more farmers steadily.
Source: Legit.ng
