Latest Update On CBN’s Intervention

The Central Bank of Nigeria (CBN) in its last Monetary Policy Committee (MPC) meeting in March, 2023 reviewed the performance of the Bank’s various interventions aimed at stimulating production and productivity across the real sector.

CBN said, between January and February 2023, it disbursed the sum of N12.65 billion to three (3) agricultural projects under the Anchor Borrowers’ Programme (ABP), bringing the cumulative disbursement under the Programme to N1.09 trillion to over 4.6 million smallholder farmers cultivating or rearing 21 agricultural commodities on an approved 6.02 million hectares of farmland across the country.

The Bank also released the sum of N23.70 billion under the N1.0 trillion Real Sector Facility to eight (8) new real sector projects in agriculture, manufacturing, and services. Cumulative disbursements under the Real Sector Facility currently stands at N2.43 trillion, disbursed to 462 projects across the country, comprising 257 manufacturing, 95 agriculture, 97 services and 13 mining sector projects.

The Bank also released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (Discos) aimed at improving their liquidity status and aid their recovery of legacy debt. This brings the cumulative disbursement under the facility to N254.39 billion.

Anchor Borrowers Programme

The Anchor Borrowers Programme (ABP) of the Central Bank of Nigeria(CBN) has empowered about 4.57 million Smallholder Farmers (SHFs) at the end of February, 2023, who cultivated over 6.02 million hectares of 21 commodities across the country, according to the lastest report from the CBN.

The apex bank in line with its developmental functions as enshrined in Section 31 of the CBN Act 2007, established the Anchor Borrowers’ Programme (ABP) to create economic linkages between SHFs and reputable companies (anchors) involved in the production and processing of key agricultural commodities.

The core of the Programme which was launched in 2015 was to provide single digit loans (in kind and cash) to smallholder farmers to boost agricultural production, create jobs, reduce food import bill towards conservation of foreign reserve.

The Programme evolved from consultations with stakeholders comprising Federal Ministry of Agriculture & Rural Development, state governments, agro-processors, commodity associations, financial institutions and smallholder farmers to ramp up agricultural production, boost non-oil exports and diversify the revenue base of Nigeria.

The programme adopts a value chain approach that links Input to Production to Processing and to Market. The scheme was targeted at smallholder farmers in order to increase their access to quality agricultural inputs and, thereby, improve the quality of produce to meet international standards.

According to CBN, the Anchor was that corporate entity or Association that presents a request for the funding of a group of smallholder farmers cultivating between 1 to 5 hectares of land who have been identified by him as the source of a certain quantity and quality of produce for their processing needs.

The ABP policy, as could be recalled, was ncessitated by the dwindling fortunes of the country from oil revenue, Nigeria’s monoproduct, and major source of revenue.

This initiative which supported local production of rice, maize, cotton and cassava, also financed 4.57 million smallholder farmers cultivating about 6.02 million hectares of farmland all over the country and created over 10 million direct and indirect jobs.

Available data shows that the the Anchor Borrowers Programme resulted in sharp decline in the nation’s major food import bill from $2.23billion in 2014 to US$0.59billion by the end of 2018, this is just as rice import bill dropped from $1 billion to $18.5 million annually.

In the last Monetary Policy Committee (MPC) meeting, the CBN while reviewing the performance of the Bank’s various interventions aimed at stimulating production and productivity across the real sector, says, between September and October 2022, under the Anchor Borrowers’ Programme (ABP), it disbursed N41.02 billion to several agricultural projects, bringing the cumulative disbursements under the Programme to N1,067.29 billion to over 4.6 million smallholder farmers cultivating or rearing 21 commodities across the country.

The Bank also released N300 million to finance large-scale agricultural projects under the Commercial Agriculture Credit Scheme (CACS), bringing the total disbursements under the Scheme to N745.31 billion for 680 projects in agroproduction and agro-processing.

The CBN governor, Mr Godwin Emefiele said, the ABP has increased rice milling plants from 6 to 50 in the last six years.

Emefiele added that the national output of rice production also increased from 5.4 million metric tons in 2015 to over 9 million metric tons in December 2021.

“We are delighted that these efforts

“ to priority sectors of the economy with sufficient employment capabilities, high growth potential, increase accretion to foreign reserves, expand the industrial base and consequently, diversify the economy. have yielded fruits is not just increasing the availability of rice, but also in moderating prices, reducing imports and increasing job creation in the country. For example, Thailand alone exported 1.3 million metric tons of rice to Nigeria in 2014.

The CBN was seriously committed to export-ready businesses, thereby encouraging businesses to embrace the bank’s concept of Produce, Add Value and Export (PAVE).

The PAVE concept aims to make Nigerians consume what they produce, add value to such products and export the surpluses.

“The ABP was launched in 2015 to curtail these imports, and since then, we have seen incremental reductions in rice imports from Thailand. By 2016, rice imports from Thailand had fallen to only 58,000 metric tons. As of the end of 2021, they only exported 2,160 metric tons to Nigeria, thereby saving us foreign exchange and helping preserve jobs in Nigeria.

“Beyond increasing our national output from about 5.4 million metric tons in 2015 to over 9 million metric tons in 2021, we have also significantly improved the productivity per hectare of the smallholder farmer from about 2.4 metric tons per ha in 2015 to between about 5 metric tons in 2021”, he said.

Real Sector Facility

The Central Bank of Nigeria in a bid to unlock the potential of the real sector to engender output growth, value added productivity and job creation had established a Real Sector Support Facility (RSSF).

The Facility was used to support large enterprises for startups and expansion financing needs of N500 million up to a maximum of N10.0 billion. The real sector activities targeted by the Facility are manufacturing, agricultural value chain and selected service sub-sectors.

Cumulatively, the bank had disbursed under the Real Sector Facility, the sum of N2.43 trillion, to 462 projects across the country, comprising 257 manufacturing, 95 agriculture, 97 services and 13 mining sector projects.

The facility was established as part of efforts by the apex bank to stimulate output growth, enhance value addition and engender productivity in the economy, and is channelled towards increasing credit

The ABP was launched in 2015 to curtail these imports, and since then, we have seen incremental reductions in rice imports from Thailand. By 2016, rice imports from Thailand had fallen to only 58,000 metric tons. As of the end of 2021, they only exported 2,160 metric tons to Nigeria, thereby saving us foreign exchange and helping preserve jobs in Nigeria

The bank said, “It is an initiative similar to the export-led industrialisation policy of South-East Asia, which changed the economic fortunes of countries such as South Korea, Taiwan, Malaysia and Singapore. PAVE, which is designed to be the key for fast-tracking a bucket of substitutes to crude oil export, encourages backward integration for the local production of items in which we have a comparative advantage”.

Nigerian Electricity Market Stabilisation Facility (NEMSF-2)

The CBN in the last MPC meeting said, it released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (Discos) aimed at improving their liquidity status and aid their recovery of legacy debt Recall, following the handover of the Power Holding Company of Nigeria (“PHCN”) successor companies to private participants on November 1, 2013, the Nigerian Electricity Supply Industry (“NESI”) has been fraught with liquidity challenges arising from several factors including insufficient gas supply and higher baseline Aggregate Technical Commercial & Collection Losses (*ATC&C”) than what had been assumed under the current MYTO 2,

The CBN had pursuant to Section 31 of the Central Bank of Nigeria Act, 2007 (the CBN Act) indicated its desire to invest in the Refinancer to be set up to provide a facility(the CBN-Nigerian Electricity Market Stabilization Facility CBN NEMSF), aimed at settling outstanding payment obligations due to Market Participants, Service Providers and gas suppliers that accrued during the Interim Rules Pernod (IRP Debts) as well as the Legacy Gas Debts of the PHCN generation companies owed to gas suppliers and the Nigeria Gas Company Limited (NGC)which have been transferred to the Nigeria Electricity Liability Management Company Limited (NELMCO) (the Legacy Gas Debt). The objective was to put the NESI on a route to economic viability and sustainability.

The Refinancer was set up by CBN and amongst other functions refinance the Facility by repaying the Lenders for payments made to Market Participants, Service Providers, NGC and gas suppliers for the settlement of the IRP Debts and the Legacy Gas Debts.

In order to secure the repayment of the Facility, NERC reset the Multi Year Tariff Order 2 (MYTO 2) by issuing the MYTO 2.1.

These Terms and Conditions are stipulated by the CBN for the participation of Banks as Mandate Banks, Collection Banks and Principal Collection Banks in the CBN-NEMSF.