DAILY TRUST
Thursday, May 26,2011
AgricBusiness
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HE Commercial Agric\llture C redit Scheme (CACS) is still in the news two years after it burst a dam of controversy in the agricultural sector. Government agencies and Nigerian banks are at daggers drawn over the disbursement process of the N200 billion fund meant for large-scale farmers. Just last week. the Nigerian
the Debt Management Office (DMO). It also says the fund shall be made available to the participating bank(s) to flIlance commercial agricultural enterprises. In addition. state governments ' and the FCTA could also borrow up to 20% of the bond proceeds for on-lending to farmers. The ceiling to the states may be reviewed as the need arises by the Project Management Committee (PMC) . But the scheme was marred
Agricultu_ral Insurance Corpora-
by controve rsy on arrival. Nigeri-
, tion (NAIC) said the implemen-
ans kicked against the initial two banks- United Bank for Africa PIc (UBA) and First Bank of Nigeria PIc (FBN)- that won the bid for the disbursement. This was later upturned after a deluge of public outcry. In April. Bayelsa and Ogun states accessed NI billion each. This brings to 24 the number of participating state governments under the scheme. Other states are Adamawa. Anambra. Bauchi. Enugu. Gombe. Kebbi. Kogi . lmo. Kwara. Nasarawa. Niger. Ondo. Sokoto. Taraba. Zamfara. FCT. Akwa Ibom. Rivers. Plateau. Edo. Kano. Benue. Bayelsa and Ogun . "The state governments requested the CACS fund for
fation is in contravention of the
law and threatened to go to court if the fund is not insured as provided for by l/le law. The Central Bank of Nigeria (CBN). on the other hand. says so far it disbursed NI33.11 billion to 139 beneficiaries made up of lIS individuals and 24 state governments.
The scheme was launched in 2009 to make funds available for farmers . .
According to the gUideline dated April IS. 2009. "the Cen tral Bank of Nigeria (CBN) in collaboration with the Federal Government of Nigeria represented by the Federal Ministry of Agriculture and Water Resources has established the Commercial Agriculture Credit Scheme, hereinafter referred to as CACS. for plOmoting commercial agricultural enterprises
in Nigeria. This Fund will complement other special initiatives of the Central Bank of Nigeria in providing concessionary fund ing for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small sca le fa rmers. Interest
Draw-back scheme. Agricultural Credit Support Scheme:' The guideline also states that the scheme sha ll be fin anced from the proceeds of the N200 billion bond to be raised by
on-lending to farmers' unions and co-operatives and to flnance other areas of agricultural intervention within their vario us states;' the central bank said. ome of the objectives are to: Fast track development of the agricultural sector of the Nigerian economy by proViding credit facilities to commercial agricultural enterprises at a single digit interest rate; to enhance national food security by increasing food supply and ' effecting lower agricultural produce and product prices. thereby promoting low food inflation; to reduce the cost of credit in agricultural production to enable farmers to exploit the potentials of the sector; to increase output, generate employment. diversify the revenue base, increase foreign exchange earni ngs and provide input for the industrial sector on a sustainable basis. On its part. the mandate of the Nigerian Agricultural Insurance Corporation (NAIC)-which has threatened to go to court - is primarily to proVide insurance cover to all categories offarmers. namely - small. medium and large scale holders. either in groups or as individuals. NAIC said it has already
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directed its "solicitors who had given all the participating commercial banks 30 days to deduct the mandatory 2.5% insurance premium due from .already disbursed agricultural loans and remit same to NAIC' A statement from NAIC Signed by the company legal secretary. Chike Okafor posited that Section 13 of the NAIC Act of 1993 had given the corporation the statutory mandate to insure all agric lending from the government, a bank or fmancial institution. It said the act empowers it to
underwrite all the agriculture credit facilities to farmers against the risk of natural disasters to safeguard the fund. given the.fact that agricultu re is a very riSky sector of the economy. Section 14( I) ofthe NAIC Act says: "A lending institution shall subject the provision of this act and other directives that may be given by the board. deduct the insurance premium due from the
loan or credit at source and remit same to the corporation not later than 30 days from the date of disbursement of part or the whole of the loan or credit" The statement says NAIC Act which is a Federal Government
"Th~Pilrti~1:patillg ~~~kSj~rei'first8aii~; , '•. Umted Bankfor.Af.nca (UBA); Access Bank, ' Fidelity B~nk,Gu'ataht}(iru~fBank, O<e~ . .- an'ic Bank>~ky.~ _ Ba.nk; Stan~i_(IBTC~.Un.ion :::: ban~/:~UnijY:B.~nk/. ~e'~·lt~·· B~nkl(iti Bank·.·.:.] .: ·: and D~()mOi1d.: ~~nk~
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law supersedes ·the CBN guidelines. adding that failure to factor in the insurance elem ent has
made the scheme to die on arrival. The agency says that only three out of the numerous participating banks have remitted· the official premium subsidy. adding that other banks were still awaiting directive from the CBN. The participating banks are: First Bank. United Bank for Africa (UBA). Access Bank. Fidelity Bank. Guaranty Trust Bank, Oceanic Bank. Skye Bank. Stanbic IBTC. Union Bank. Unity Bank. Zenith Bank. Citi Bank and Diamond Bank. hile disbursement
W
had since com-
menced and the balance sheet hovers around N66.89 'billion now. observers fear that the aim of the scheme may have been.defeated. The central bank said it withdrew N20.s68 billion from flve banks with respect to 22 projects because the banks contravened the guidelines of the scheme. N12.0s3 billion was withdrawn from UBA meant for 17 projects; GTB N0.581 billion for a project; Skye Bank N2 billion for.a project; First Bank N 1.6 billion for a project; and Union Bank N2.166 billion for a project. With a five- year loan tenure and N200 million collateral. the scheme seems to have eluded most Nigerians. as Daily Trust's effort to meet a single beneflciary failed. A large scale farmer Isa Yaro who has 125 hectares worth N400 million at Nasarawa State. could not secure the facility. even though his name was among those publish.ed by the CBN in the newspapers.
Experts say the problem associated with the N200 billion fund remaIns an unresolved puzzle
unless the law is respected and there is transparency in the disbursement exercis"e.