Agric Credit Guarantee Scheme declines by 38 percent in 2 years
Nigerian small farm holders will have to source for more high interest loans from privately owned financial institutions following a consistent decline in loans disbursed under the Agricultural Credit Guarantee Scheme Fund (ACGSF).
The ACGSF, which is backed by the Federal Government and the Central Bank of Nigeria (CBN), was established as a window through which individual and corporate farmers could get soft loans at single digit and declined by 38 percent between 2014 and 2016.
On an annual basis, the ACGSF loans fell by 12 percent from N12.99 billion in 2014 to N11.10 billion in 2015 and further declined by 29 percent to N8.10 billion in 2016. This implies that during the period, farmers’ access to concessionary loans under this scheme was constrained by 38 percent in 2 years.
With regard to the beneficiaries, our analysis shows that individual farmers have benefited the most from the scheme, as out of the 1.06 million individual farmers and institutions on the list of beneficiaries, 97 percent of the beneficiaries and 94 percent of the loans disbursed under the scheme since inception, went to individual farmers. This translates to 1.03 million individual farmers and N97.24 billion out of 1.06 million farmers and institutions, and N104.01 billion loans disbursed under the scheme since 1978.
When analysed by purpose for which the loans were disbursed, the decline cuts across all the different categories of farming business, except for vegetables, tuber/roots, rubber, ginger, cotton and cocoa. Loans disbursed to vegetables farmers grew by 4 percent during the period. Tuber/roots crops farmer got loans 10 percent higher than the 2014 level while ginger and cotton farmers received N31.5 million and N2.1 million respectively in 2016 as against no loans in 2014.
Furthermore, rubber and cocoa farmers got N2 million and N320.5 million in 2016, which were higher than N1.1 million and N218 million received as facilities in 2014 by 82 percent and 47 percent respectively.
On the contrary, soyabeans, groundnuts, beans farmers, as well as their colleagues in mixed farming business had their loans decline the most during the period. Facilities given to soyabeans farmers declined by 95 percent, from N151.6 million in 2014 to N7.03 million in 2016. Loans to groundnuts farmers fell by 85 percent; beans farmers, 75 percent, while those given to mixed farmers declined by 73 percent.
Adetola Adewale, a manager at FA Farms Ijebu Ode, said that the inability of farmers to get loans from banks has affected their expansion plans. “Recently, we approached a notable bank for loans. Our request was not attended to, as the bank was reluctant to give us audience. It was later an insider told us that the funds were not there”, he said. “And as it is now, our expansion plans have been put on hold”, he added.
Another farmer who did not want his name in print, attributed the decline to the level of documentations required by banks. “Although the facilities come at a single digit, the level of documentation is the same as when you go for loans from commercial banks,” he said.
A similar pattern was exhibited in loans repayment which declined by 14 percent between 2015 and 2016. A total of 56,671 individual farmers and institutions repaid N9.46 billion in 2015, meaning that on the average, an average farmer repaid N166, 910 during that year. However, while the number of farmers increased to 58,548 in 2016, the total amount repaid fell by 14 percent to N8.10 billion, meaning that an average farmer repaid N138, 430 in 2016.
The external sector, which is one of the areas the impact of local production can be felt, recorded a mixed result. This is because while the export of vegetables, plastic and rubber declined by 64 percent and 39 percent respectively, between 2014 and 2016, the export of animal and vegetable fats and oil rose marginally by 1 percent.
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