The International Monetary Fund has confirmed that 76 percent of loans disbursed under the Central Bank of Nigeria’s Anchor Borrowers’ Programme, for farmers have not been returned.
This is according to information provided by the International Monetary Fund in its Selected Issues paper on Nigeria.
The issue paper was created by the fund’s staff team as background information for the ongoing consultations with the country.
The Punch reported that the document was based on the available information as of its completion date which was January 12, 2023.
The CBN’s Anchor Borrowers’ Programme aims at providing loans either in cash or kind to small scale farmers to enhance agricultural production, create jobs and reduce importation of Agricultural produce.
IMF admits difficulties in reaching the right recipients of the loan, resulting in the low turnout and contributions to the agricultural sector.
According to the paper, “The weak effect of agricultural credit on production growth could be associated with difficulties in targeting the correct recipients.”
It also stated that the turnout of about 24 percent payment is low.
“For the Anchor Borrowing Programme, repayment is also low at 24 per cent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year.
According to the document, there incentive structure is weak, and notes that the funds are not used for the targeted purposes.
“Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases (e.g., new agricultural input trading companies to elicit trading rents).”
Meanwhile, the Anchor Borrowers Programme which was founded in 2016, initially issued about N40bn to support farmers by giving single-digit interest rate loans.
According to The Punch, through mid-2022, over N1 trillion had been disbursed from this scheme, with CBN supplying an increasing amount of the banking system’s agricultural finance.