Farmers Yet To Repay Over 70% Of CBN’s N2trn Anchor Borrowers Loan—IMF

Over 75 per cent of the N1.9trn loan given out by the Central Bank of Nigeria under the Anchor Borrowers Programme has not been repaid by the beneficiaries, the International Monetary Fund has said.

The IMF revealed this in its Selected Issues paper on Nigeria, which was prepared by a staff team of the fund as background documentation for the periodic consultation with the country.

The document was based on the information available as of the time it completed it’s observations on January 12, 2023.

With a total loan of N1.9trn to farmers, it therefore implies that about N1.4trn of this loan had yet to be repaid by farmers.

The Anchored Borrowers’ Programme was established under Section 31 of the CBN Act of 2007 to create economic linkages between smallholder farmers and reputable companies (anchors) involved in the production and processing of key agricultural commodities.

The programe targets cereals, cotton, roots and tuber, tree crops, tomatoes, legumes, and livestock among others.

The ABP has four major objectives which are to increase banks’ financing to improve productivity in the sector; reduce Nigeria’s food import bill; create a new generation of farmers through innovative financing and deepen financial inclusion and grow small farmers from subsistence farming to commercial.

Despite the intervention, the IMF stated that agricultural credit in the country has not significantly boosted production.

The IMF noted that although the CBN allows farmers to pay in kind or cash under the ABP, repayments have been very low.

It said, “The weak effect of agricultural credit on production growth could be associated with difficulties in targeting the correct recipients.

“For the Anchor Borrowing Programme, repayment is also low at 24 per cent, especially since repayment can be made in kind, thereby 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 occasionally the funding is used for other purchases (e.g., new agricultural input trading companies to elicit trading rents).”

An analyst and Dean of the Faculty of Economics at the Ahmadu Bello University, Zaria, Professor Peter Njiforte had in an interview with YJE WHISTLER said the N1.9trn disbursed under the Anchored borrowers’ Programme of the Central Bank of Nigeria is a flaw as the funds do not reach target farmers.

Njiforte had said, “Corruption has overtaken the way some of those stimulus packages for example the Anchore Borrowers’ Programme.

“The funds were made for farmers but a good number, I can’t substantiate but from the story, we are hearing, we have a number of farmers who are not benefiting from the programme.

“The programme is a flaw because a lot of the recipients are not farmers. The government wants Nigeria to be self-sufficient in major staple foods.”