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Published On: Tue, Sep 6th, 2016

Bank products that promote Agric

 

In the face of falling oil prices, the government of President Buhari has said in clear terms that the agricultural sector is one of the areas it would pay serious attention to in its bid to pilot the country’s economy from its present mono-product status. It is already making frantic efforts to prod young Nigerians to embrace commercial agriculture.

Meanwhile, one of the major challenges that have stalled the growth of this sector in Nigeria is access to finance. This is due to the high risk nature of the agricultural business and its low returns, which make financial institutions to be weary of lending to the sector. But with the renewed interest of the Federal government to grow the sector, banks are now showing more interest in agric.

They have designed different products which are aimed at helping farmers extend their business. Some of these products are reviewed:

Commercial Agriculture Credit Scheme (CACS)

The Commercial Agriculture Credit Scheme (CACS) is a special credit intervention fund of N200billion created by the Federal Government of Nigeria to fast track the development of the agricultural sector. It is meant to bridge the financing gap in the sector. It is an intervention fund that those in agro-business could access from any of the commercial banks operating in the country.

Features

Maximum obligor limit is N2billion for medium and large scale private sector enterprises and N1billion for state governments.

The participating private sector entity must have a minimum farm asset base of N50million (excluding farm land).

An irrevocable Standing Payment Order is required in the case of State Governments.

Target Market

CACS is designed for medium or large scale commercial farms involved in cultivation of crops, rearing of livestock, fisheries, etc.

Limited Liability Companies involved in agricultural production, storage, processing, marketing and enterprise development could also leverage on this intervention fund.

State Governments and the FCT are also legible to access CACS for on-lending/special intervention to small scale farmers in their domains.

Benefits

The Commercial Agriculture Credit Scheme is a single digit interest rate loan with 9 per cent interest all-in being maximum rate chargeable on it.

This intervention fund is available till 2025.

Documentation

Formal application for a credit Facility

Certificate of Incorporation

Memorandum and Article of Association

Board Resolution to Borrow

Feasibility Study/Business Plan

To access this loan, just walk into a branch of any commercial bank in the country and ask for the agriculture desk.

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Bank of Agriculture (BOA) products

The Bank of Agriculture as a Development Finance Institution committed to serving the rural sector with its existing network of over 136 operational outlets where it enjoys direct outreach to more than 350,000 microfinance clients, mused different options for strengthening its direct microfinance portfolio with a model that focuses on the market layers located below its current direct microfinance market by targeting households whose entry level loan requirements range from N 20,000-N30, 000.

MICRO LOANS SCHEME

This scheme is targeted at providing credit to finance both micro agriculture and micro non-agricultural activities. This loan can be accessed by traders, artisans, arable/field crops farmers, fish farmers, agro-processors, livestock farmers, agricultural produce marketers, tree crop farmers as individuals, Cooperative groups, Self-help groups etc.

SME/AGRIBUSINESS LOANS SCHEME

This Loan Scheme is for financing small, medium and large scale agribusinesses projects across the Agriculture Value Chain.

ON-LENDING LOAN SCHEME

This is a relationship through which the Bank partners with States, Local Governments, Agricultural Financing Agencies, Non-Governmental Organizations  (NGO), Community Based Organization (CBO), Self Help Groups (SHGs) etc. to reach to larger segment of Nigerians especially the underprivileged and rural poor with micro credit for enterprise development.

Unity Farmers Cooperatives Finance Scheme

Unity Farmers Cooperatives Finance Scheme is designed to meet the financial needs of farmers’ cooperative societies/ farmers groups in order to help grow their agribusiness.

This product covers production, processing and marketing of Agric commodities (crops, fisheries, livestock etc.)

Features

Farmers’ cooperative societies/ farmers groups have to maintain a 20 per cent of the amount they want to draw in savings account to serve as collateral support.

There is counter guarantee of members of the Cooperative Societies (Joint and several liability of members).

To be able to access this loan, cooperatives must be at least 6 months old with Registrar of Cooperatives.

Farmers’ cooperative societies/ farmers groups eligible for this scheme must have a current account with Unity bank.

Benefits

This loan comes with a CBN Credit Risk Guarantee and NAIC Insurance cover on the approved amount.CBN guarantee of up to 75% upon payment of 3% Credit Risk Guarantee with up to 50% interest rebate as reward to good performance.

Customer can benefit up to five times the amount saved as cash collateral.

Facility tenor ranges between 12 and 24 months and customers enjoyprofessional advisory services.

BOI CAP FUND FOR AGRICULTURAL PRODUCT PROCESSING

Bank of Industry (BOA) established the Cottage Agro-Processors (CAP) Fund to support the establishment of cottage agro processing plants that will produce food products and raw materials for industries within and outside the Staple Crop Processing Zones (SCPZs) across Nigeria.The Fund is expected to create about20,000 direct and indirect jobs.

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Features

The fund is targeted at small-and medium-scale industries at the low-technology, labour-intensive end of the spectrum and is expected to finance about 1000 projects at nine percent interest charges.

Those applying for this fund are expected to pay a management fee of 1%. And it has afive (5) year tenor with a moratorium of six (6) months.

The Fund can be accessed by Limited Liability Companies, Enterprises and Cooperative Societies engaged in the processing of agricultural products either into finished food products or raw materials for industry or for the export market. Producers of products such as:  Cassava, Oil Palm, Rice Paddy, Groundnut, Yam, Maize, Sorghum, Aquaculture, Livestock, Cocoa, Shea nut, Plantain, Cashew, Tomato and all their individual derivatives eligible to apply for BOICAP fund.

Benefits

The BOA CAP Fund attracts a single digit interest rate of 9 per cent and has a 5 year loan tenor with 6-month moratorium.

It is a guaranteed working capital and it easy to process.

Documentation

Photocopy of Certificate of Registration (Form CAC/BN/A1)

Business Plan

Valuation report on existing assets prepared by an accredited BOI valuer

Value of equipment to be purchased from a BOI accredited supplier (including invoices).

Source(s) and value of raw materials to be purchased expressed in units.

Two (2) passport photographs of the Promoter (business owner)

Photocopy of the Current Tax Clearance Certificate of the Proprietor

Means of Identification (i.e. International Passport or Driver’s License or National Identity Card) of the Proprietor

Bank Statement of the Business Enterprise for six (6) months.

Declaration of Outstanding Liabilities to other Banks and Individuals

Reference letter from a recognized traditional ruler or authorized Local Government Official.

Provision of a minimum of two (2) External Guarantors to guarantee the loan

The Guarantors must belong to any of the following categories Senior Civil Servant (not below the rank of Assistant Director).

Bankers (not below the level of Branch Manager), with minimum of 5 years in service with the Bank (current employer) Lawyers (SAN).

Before applicants are given this loan, they are mandate to undergo entrepreneurial training at any of the existing accredited Business Development Service Providers (BDSP) in order to improve their entrepreneurship know-how.

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