The International Monetary Fund (IMF) says only 24 percent of loans collected by farmers under the anchor borrowers’ programme (ABP) of the Central Bank of Nigeria (CBN) have been repaid.
This implies that 76 percent of the loans are yet to be paid.
This is contained in the international financial organisation’s latest country report titled ‘Nigeria: Selected Issues’.
The IMF said the report is based on the information available at the time it was completed on January 12, 2023.
The ABP was launched by President Muhammadu Buhari on November 17, 2015, to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.
It was designed to provide farm inputs (in kind and cash) to SHFs to boost production of the key commodities, stabilise input supply to agro-processors and address Nigeria’s negative balance of payments on food.
Last year, the CBN said the ABP increased rice milling plants from 6 to 50 in the last six years.
In the report, the IMF said agricultural credit in the country has not significantly succeeded in increasing production due to the difficulty in targeting the correct recipients.
It said that although the CBN allows farmers to pay in cash or give the central bank his/her produce of same value under the ABP, repayments have been very low.
The report said, “For the Anchor Borrowing Program, repayment is also low at 24 percent, 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).”
The IMF also said recent data (November 2020) from the central bank indicate that the repayment rate for the commercial agriculture credit (CAC) scheme was at almost 66 percent.