Agricultural Credit Guarantee Scheme Fund (ACGSF)The ACGSF was established by Decree No. 20 of 1977, and started operations in April, 1978. Its original share capital and paid-up capital were
Between 1978 and 1989 when the government stipulated lending quotas for banks under the Scheme, there was consistent increase in the lending portfolios of banks to agriculture, but after the deregulation of the financial system, banks started shying away by reducing their loans to the sector due to the perceived risk. In order to reverse the declining trend several innovations and products were introduced under the Scheme such as:
- Application for credit facilities
- Application for Guarantee
- Application for Enhancement
- Application for Extension
- Notice of Default
- Guarantee Claims; and
- Annual Returns
To access loans under ACSS, applicants (practicing farmers and agro-allied entrepreneurs with means) are encouraged to approach their banks for loan through the respective state chapters of farmers associations and State Implementation Committees. However, large scale farmers are allowed under the scheme to apply directly to the banks in accordance with the guidelines.
ACSS funds are disbursed to farmers and agro-allied entrepreneurs at a single-digit interest rate of 8.0 percent. At the commencement of the project support, banks will grant loans to qualified applicants at 14.0 per cent interest rate. Applicants who pay back their facilities on schedule are to enjoy a rebate of 6.0 per cent, thus reducing the effective rate of interest to be paid by farmers to 8.0 per cent.
The Implementation Guidelines will be determined administratively as soon as a decision is taken on the proposed fund.
- Fast-track the development of the agricultural sector of the Nigerian economy by providing credit facilities to large-scale commercial farmers at a single digit interest rate;
- Enhance national food security by increasing food supply and effecting lower agricultural produce and products prices, thereby promoting low food inflation;
- Reduce the cost of credit in agricultural production to enable farmers exploit the untapped potentials of the sector; and
- Increase output, generate employment, diversify Nigeria�s revenue base, raise the level of foreign exchange earnings and provide input for manufacturing and processing on a sustainable basis. The Scheme which is a sub�component 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).
The Central Bank of Nigeria and the Federal Ministry of Agriculture and Waters Resources jointly ensure that the scheme is implemented successfully. This is achieved through the Project Steering Committee (PSC) comprising the Honourable Minister of Agriculture and Water Resources (Chairman), the Governor of the Central Bank of Nigeria, Representatives of the Federal Ministry of Finance and Commercial Farmers, respectively and the Programme Coordinator of the Commercial Agriculture Development Programme. The day-to-day implementation of the Scheme is undertaken by a Technical Implementation Committee (TIC) made up of the Director of Development Finance Department, CBN as the Chairman, Head of Agricultural Credit Support Division, CBN and a Consulting Group as members, and the Programme Coordinator of the Commercial Agriculture Development Programme of the Federal Government as the Secretary.
CACS is operated in two tranches of N100billion each. The 1st Phase of the tranche ran from May to December, 2009, while the 2nd tranche commenced in February, 2010.
Detailed information on the operational modalities for the CACS are shown on the Guidelines for Commercial Agricultural Credit Scheme while the performance of the Scheme are indicated in the Monthly Report.