Low Loan Recovery Damages CBN's ABP - Stakeholders

A low loan recovery rate for some farmers who received loans through the Anchor Borrowers Program (ABP) has been criticized by several stakeholders.

According to the News Agency of Nigeria (NAN), the CBN created the ABP at its commencement in November 2015 with the intention of giving smallholder farmers access to both cash and in-kind farm supplies.

The goal was to increase food commodity production, stabilize the input supply to agro-processors, and address the nation's food-related negative balance of payments.

The apex bank reported that by 2022, the scheme had benefited at least 4.8 million farmers.

Even though food prices increased dramatically in the years after the program's implementation, it has been tarnished by loan default.

The International Monetary Fund (IMF) estimates that 76% of the loans obtained by beneficiaries have not yet been returned.

"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.

According to the IMF, the country's agricultural lending program has not been able to boost production because it is challenging to connect with the intended farmers.

According to the report, repayments had been extremely low even though the CBN had permitted farmers to pay in cash or provide the central bank produce of the same value under the ABP.

"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.

Additionally, a number of farmer associations claimed that the loans were not disbursed properly, which contributed to the challenge in securing repayment.

The All Farmers Association of Nigeria's (AFAN) National Secretary, Yunusa Yabwa, claimed that the ABP was misused and that it did not live up to expectations in terms of increasing food production.

The majority of program beneficiaries, according to him, 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.

According to Abdulmumin Isa, Director of the CBN's Corporate Communications Department, the central bank has released N1.08 trillion as of February, of which N960 billion was owed.

Isa stated that the ABP had helped roughly 4.57 million smallholder farmers across the nation who farmed more than 6.02 million hectares of 21 different commodities.

According to NAN, the ABP instructions provide that after harvest, benefited farmers must pay back their loans with produce to an anchor, who then deposits the cash equivalent into the farmer's account. The produce must meet the loan principal and interest.

However, because more than 50% of the loan was left unpaid, default payments have kept up with the program.