In its bid to promote and fully tap into the county’s potentials in Agriculture, the apex bank, Central Bank of Nigeria established the Anchor Borrower Scheme. This initiative, launched in 2017 with the aim of creating a link between anchor companies and small-scale farmers. Currently, more than 80percent of farmers in Nigeria are smallholder farmers.
This link between smallholder farmers and large-scale processors (Anchors) is expected to increase outputs and significantly improve the capacity of the processor.
Figures from the press-reader show that annually, a staggering 1.3billions tons of food is lost after harvesting due to improper preservation methods and lack of processing facility.
The National Bureau of Statistics also shows GDP from Agriculture in Nigeria increase to ₦5 million in the third quarter of 2017 from ₦3 million in the second quarter of 2017.
GDP from Agriculture in Nigeria has averaged the ₦3 million from 2010 until 2017 when it reached its all-time high with an increase of ₦2 million in the third quarter of 2017. Agriculture remains a dominant sector in the country and accounts for the employment of about 60% of its workforce in the rural areas.
How the program works
While the loan is targeted at farmers that are actively involved in the selected commodities, such farmers must also be a member of a group/cooperative society.
Loans range from ₦220billion for micro, small and medium enterprise development fund. They are disbursed through the financial institutions referred to as the Participating Financial Institutions (PFIs) majorly Deposit Money Bank, Micro-finance Institutions and Development Finance Institutions. The loans granted to these Small Hold Farmers (SHF) are repaid at the harvest of produce which is mandatory and delivered to the large-scale processors (The Anchors)
Farm produce captured under Anchor Borrower Scheme includes
- Cereals (Maize, Rice and Wheat etc)
- Roots and Tubers
- Tree crops (oil palm, cocoa, and rubber)
- Legumes (soyabeans, sesame seed, and cowpea)
The Value chain in the Anchor Borrower scheme
The first step is an expression of interest Letter to the CBN by various large-scale processors (Anchors) or state governments indicating interest with targeted commodities, number of farmers, and hectares to be covered.
The project Monitoring Team visits the farmers and the farm size to verify all information earlier supplied.
The PFIs, who also have a representative on the monitoring team confirms their participation.
A tripartite agreement is signed between the Participating Financial Institutions (PFIs), Anchors and the Farmers.
Submitted loan application forms from the PFIs containing a list of farmers.
However, before the funds are disbursed to farmers, such farmer must have 5% equity contribution to their accounts with their PFIs. Any farmer that fails to contribute this 5% equity contribution will not be entitled to this loan scheme.
How has the scheme fared
The CBN recently announced a strategic partnership with some farmers association with a view to consolidate on the gains of the scheme and also reach out to more deserving smallholder farmers in the country.
According to the Corporate Communications manager of the CBN, Mr. Issac Okoroafor, CBN targets 500,000 participants by end of 2018 on the ABP.
He said the CBN is expanding the ABP through the direct engagement of commodity associations.
“Currently we are working with the Rice Farmers Association of Nigeria (RIFAN) to mobilize 300,000 rice farmers who would add two million tons of rice to the national output in one year.”
The partnership between Rice Framers Association of Nigeria will provide about 300,000 rice farmers across 20 states with the needed support under the Anchor Scheme and this is also in tandem with the Federal Government’s agenda for self –sufficiency in rice production. Also, about ₦45.5 billion has been released through 13 Participating Financial Institutions in respect of over 218,000 farmers cultivating nine commodities across 30 States.
It is expected that farmers will take advantage of this scheme to increase productivity and also the large scale processors will also benefit from direct inputs for their productions.