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A total of N5.85
billion was repaid as loans by Nigerian farmers under the Agricultural
Credit Guarantee Scheme Fund (ACGSF) last year. The highest repaid
amount of N769.15 million, representing 13.15 percent of the total, was
made by Delta State, followed by Katsina and Adamawa states with
N667.21 million and N532.64 million, respectively. Ekiti had the lowest
repayment figure of N15.7 million, trailing Abuja, which repaid N19.12
million, and Bayelsa, which repaid N19.18 million.

According to data
released by the Developmental Finance department of the Central Bank of
Nigeria (CBN), the funds were disbursed to finance 50,119 projects
across the country, with Katsina State topping the list at 7,184
projects, followed by Kogi and Sokoto states with 6,877 and 5,618
projects, respectively. Abuja had the least number of projects with 50
while Ekiti and Bayelsa had 111 and 120 projects, respectively.
Nassarawa State did not record any projects.

Since its establishment in 1978, the ACGSF has granted around 692,716 loans valued at about N41.34 billion.

The ACGSF was
formed solely to encourage financial institutions to lend funds to
those engaged in agricultural production and agro-processing
activities, with the aim of enhancing the export capacity of the nation
as well as for local consumption. The fund is set up with the sole
purpose of providing guarantees in respect to loans granted by any bank
for agricultural purposes.

Interest Drawback

Likewise, N694.67
million has been repaid to farmers under the Interest Drawback
Programme (IDP) of the ACGSF. The IDP was set up in 2004. Under the
IDP, farmers shall borrow from the lending banks at market-determined
rates and after the liquidation of the loan, they shall be entitled to
interest drawback at the pre-determined IDP rate. The IDP has an
authorised capital fund of about N2 billion and is funded jointly by
the federal government and the Central Bank of Nigeria (CBN) in the
ratio of 60:40.

Under the IDP, the
highest amount paid during the period was made last year when N227.44
million was paid out. According to the CBN, the repayment trend is
encouraging. “A trend analysis of the loan repayment performance of the
ACGSF over the years shows that the IDP has impacted positively on the
operations of the scheme as it induced clients to repay on time,” the
CBN stated.

To be eligible for
the loan drawdown, a farmer must have repaid both loan principal and
interest within the agreed tenure. However, a grace period of three
months for repayment may be allowed but drawback entitlement shall be
calculated only up to the scheduled date for the final repayment of the
loans. This means that interest accruing during the grace period will
not be part of the amount to be refunded.

“Farmers that liquidate loans after the expiration of the guarantee
certificate/grace period are not eligible and shall be disqualified,”
say the CBN guidelines. “A loan for which repayment period is extended
after the expiration of the original guarantee certificate shall not
qualify to benefit under the IDP.”