CBN begins operation of Bankers Committee Agrilending Scheme

The Central Bank of Nigeria (CBN) has commenced operations of the Agriculture and Small and Medium Enterprises Investment Scheme (AGSMEIS). The bankers committee at its 331st meeting in February this year gave approval for the scheme which is in collaboration with the CBN.

Start off fund

N26.5 billion has been contributed by 21 commercial banks in the country. Banks have been mandated to contribute 5% of their profit after tax annually for equity investment in agri business and SMEs.

Who will manage the fund ?

A Special Purpose Vehicle (SPV) Bankers Fund Managers Limited will run the fund while a board of directors will monitor its implementation. In the interim, a Project Review Committee with membership drawn from 7 banks has been set up.

Where will the money go to ?

The fund will invest in the agri processing as well as SMEs in the real and service sectors. A maximum of N2 billion can be invested in a single project. The scheme is billed to last for ten years. In addition, there shall be a lock up period of 3 years to encourage value creation. Simply put, investments in a particular business can not be divested for a period of three years.

Other agri lending intiatives by the CBN

The Central Bank of Nigeria (CBN) in collaboration with the Federal Ministry of Agriculture and Water Resources (FMA&WR) established the Commercial Agriculture Credit Scheme (CACS) in 2009 to provide finance for the country�s agricultural value chain (production, processing, storage and marketing). Increased production arising from the intervention would moderate inflationary pressures and assist the Bank to achieve its goal of price stability in the country.

The Scheme which is a subcomponent of the Federal Government of Nigeria�s Commercial Agriculture Development Programme (CADP) is financed through a N200billion Bond raised by the Debt Management Office (DMO).

Loans to eligible entities under the Scheme are disbursed at a maximum interest of 9 percent. The subsidy arising from this stipulated rate and the market rate on all loans granted, and the administrative expenses of the Scheme are borne by the Central Bank of Nigeria (CBN).

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.

He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).

He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.