Central Bank of Nigeria (CBN) has threatened to ban out rightly, Participating Financial Institutions (PFIs) from participating in its intervention schemes after two infractions of charging unauthorised fees/interest rates in the Anchor Borrowers’ Programme (ABP).
The participating financial institutions are deposit money banks, development finance institutions and microfinance banks.
Other sanctions to be meted on these institutions for charging interest rates higher than the prescribed 9 percent include reversal of the charged fees/interest, penal charge at the maximum lending rate of the PFI and issuance of warning letter to the PFI.
This and other issues are contained in the Anchor Borrowers’ Programme guidelines released on Wednesday by the CBN.
The ABP, launched by President Muhammadu Buhari on November 17, 2015, is intended to create a linkage between anchor companies involved in the processing and smallholder farmers that required key agricultural commodities.
The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to smallholder farmers to boost production of these commodities, stabilise inputs supply to agro processors and address the country’s negative balance of payments on food.
According to the CBN, the broad objective of the ABP is to create economic linkage between smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of processors.
The guideline stated, “The anchor borrowers’ fund shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF).
“Loan amount for each smallholder farmer shall be arrived upon from the economics of production agreed with stakeholders.
“Also, interest rate under the ABP shall be guided by the rate on the N220 billion MSMEDF, which is currently at 9 percent per annum (all inclusive, pre and post disbursement). The PFIs shall access at 2 percent from the CBN and lend at a maximum of 9 percent per annum.”
