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HomeEconomyLow recovery of anchor borrowers’ loans worrying

Low recovery of anchor borrowers’ loans worrying

Abuja, Sept. 16, 2023: Some stakeholders in agriculture have decried the low recovery of loans granted some farmers under the Anchor Borrowers Programme (ABP).

At inception in November 2015, the ABP was designed by the CBN to provide farm inputs in kind and cash to smallholder farmers.

This was to boost production of food commodities, stabilise inputs supply to agro-processors and address the country’s negative balance of payments on food.

By 2022, the apex bank revealed that at least 4.8 million farmers had benefitted from the programme.

But the programme has been marred by loan default, even as food prices rose significantly within the years it took effect.

According to the International Monetary Fund (IMF), 76 per cent of the loans collected by beneficiaries were yet to be repaid.

The IMF stated that agricultural credit in the country had not succeeded in increasing production due to the difficulty in reaching the targeted farmers.

It said that although the CBN allowed farmers to pay in cash or give the central bank produce of the same value under the ABP, repayments have been very low.

“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,” it said.

Various farmer associations also said that the loans were not disbursed adequately, hence the difficulty in ensuring repayment.

Yunusa Yabwa, the National Secretary of All Farmers Association of Nigeria (AFAN), said that the ABP was abused, adding that it did not meet expectations to boost food production.

He said that most beneficiaries of the programme were not farmers.

“Many people collected the loan to invest in other projects, not farming, and that is why it is difficult to ensure repayment.

“The ABP is a laudable programme, but there are challenges of recovery.

” Some of our members benefited from it, but most people that benefited are not farmers,” he said.

Dr Abdulmumin Isa, CBN’s Director, Corporate Communications Department, said that the apex bank had released N1.08 trillion, as at February, out of which N960 billion was due for repayment.

Isa disclosed that ABP had supported about 4.57 million smallholder farmers who cultivated over 6.02 million hectares of 21 commodities across the country.

ABP guidelines stipulate that upon harvest, benefiting farmers are to repay their loans with produce, which must cover the loan principal and interest, to an anchor, who pays the cash equivalent to the farmer’s account.

But default payments have continued to trail the programme, as over 50 percent loan remained unpaid.

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