The Central Bank of Nigeria yesterday said that it would henceforth share with banks interest earnings on loans granted to farmers under the Commercial Agricultural Credit Scheme (CACS).
This was announced in an amendment to the guidelines for the (CACS) via a circular titled, “Amendment to Pricing of Commercial Agricultural Credit Scheme (CACS) and guidelines”.
Signed by the Director, Financial Policy and Regulation Department, Mr. Kelvin Amugo, the circular stated, “Commercial agriculture credit scheme (CACS), introduced in April 2010, has elicited tremendous interest from the Nigerian public. As part of efforts to sustain the public interest and enhance its operations to meet expectations, the Central Bank of Nigeria (CBN) has revised CACS Guidelines. The revision, which affects section 8.0 and 17.0 (b) (IV) of the revised guidelines, provides as follows;
Payment of interest on CACS facilities shall not exceed 9.0 per cent, inclusive of all charges. These charges shall be shared in ratio of 7 percent to the participating bank and 2 per cent to the CBN:
“Section 8.0 subsection (ii) of the CACS Guidelines has been amended accordingly to reflect the revised interest sharing ratio. The revised fee sharing formula shall take effect from the date of the revised guidelines;
“Funds shall be released to participating banks at 2. Per cent interest rate after a confirmation of its intent/readiness to disburse the funds- Section 17.0 (b) (iv) of the extant revised Guidelines. Participating banks and the banking public are enjoined to note that the revised Guidelines dated April 29, 2015 supersede the previous ones. For further information, kindly contact the Director, Development Finance Department, Central Bank of Nigeria, Abuja.”
The CACS is financed from the proceeds of the N200billion seven (7) year bond raised by the Debt Management Office (DMO). The fund made available to the participating bank(s) to finance commercial agricultural enterprises. In addition, each State Government could borrow up to N1.0billion for on-lending to farmers’ cooperative societies and other areas of agricultural development provided such initiatives/interventions are line with the objectives of CACS.
According to the CBN Economic report for February, “At end-February 2015, the total amount released by the CBN under the Commercial Agriculture Credit Scheme (CACS) to the participating banks for disbursement stood at N272.36 billion for three hundred and fifty one (351) projects/promoters”.
