ORGANISED PRIVATE AGRICULTURAL SECTOR (OPAS) AND THE PROVISION OF N200 BILLION PUBLIC FUNDS FOR COMMERCIAL AGRICULTURE IN NIGERIA - PowerPoint PPT Presentation

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ORGANISED PRIVATE AGRICULTURAL SECTOR (OPAS) AND THE PROVISION OF N200 BILLION PUBLIC FUNDS FOR COMMERCIAL AGRICULTURE IN NIGERIA

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Title: ORGANISED PRIVATE AGRICULTURAL SECTOR (OPAS) AND THE PROVISION OF N200 BILLION PUBLIC FUNDS FOR COMMERCIAL AGRICULTURE IN NIGERIA


1
ORGANISED PRIVATE AGRICULTURAL SECTOR (OPAS) AND
THE PROVISION OF N200 BILLION PUBLIC FUNDS FOR
COMMERCIAL AGRICULTURE IN NIGERIA
  • by
  • MR. JOE ALEGIEUNO
  • Director
  • Development Finance Department

2
Outline of Presentation
  • Introduction
  • Objectives of CACS
  • Target Agricultural Commodities
  • Funding
  • Management
  • Eligibility for Participation
  • Modalities Tenor
  • Acceptable Collateral
  • Procedure For Applying for the Loan
  • New Developments

3
INTRODUCTION
  • As part of its developmental role, the Central
    Bank of Nigeria in collaboration with the Federal
    Ministry of Agriculture and Water Resources
    (FMAWR), has established the Commercial
    Agricultural Credit Scheme (CACS).
  • The scheme was created to promote commercial
    agricultural enterprises in Nigeria, which is a
    sub-component of the Federal Government of
    Nigeria Commercial Agriculture Development
    Programme (CADP) being anchored by the Federal
    Ministry of Agriculture and Water Resources
    (FMAWR).

4
INTRODUCTION CONTD
  • CACS was also introduced to complement other
    initiatives of the Bank aimed at providing
    funding for agricultural development. Such
    initiatives as the Agricultural Credit Guarantee
    Scheme (ACGS) which is for small and medium scale
    farmers, Interest Draw-back Programme and
    Agricultural Credit Support Scheme (ACSS), etc.

5
OBJECTIVES OF CACS
  • To fast track development of the agricultural
    sector of the Nigeria economy by providing credit
    facilities to commercial agricultural enterprises
    at single digit interest rate.
  • To enhance national food security by increasing
    food supply and effectively lower the prices of
    agricultural produce and products, thereby
    promoting low food inflation.
  • To reduce the costs of credit in agricultural
    production and enable farmers exploit the full
    potentials of the sector.
  • To increase output, generate employment,
    diversify the revenue base of the economy,
    increase foreign exchange earnings and provide
    input for the industrial sector on a sustainable
    basis.

6
TARGET AGRICULTURAL COMMODITIES
  • Cash crops cotton, oil palm, rubber, Jatropha
    carcus, sugar cane
  • Food crops Rice, maize, cassava, wheat, fruits
    and vegetables.
  • Livestock dairy, poultry and piggery.
  • Fisheries.

7
MOBILIZATION OF FUNDS FOR THE SCHEME
  • An MOU to enable the Debt Management Office (DMO)
    raise N200.0 billion was signed on August 28,
    2009.
  • The DMO had provided N100 billion.
  • The DMO is expected to raise the balance of N100
    billion to be disbursed to the CBN in two more
    installments between September and October, 2009

8
FUNDING
  • The N200 billion being raised by the DMO shall be
    in two tranches.
  • The first tranche envelope of N100 billion had
    been released to the participating banks, United
    Bank for Africa Plc. (N75billion) and First Bank
    of Nigeria Plc. (N25 billion) representing 50 of
    the Fund.
  • The second tranche will be released to new banks
    that will be brought under the Scheme in the
    nearest future.

9
MANAGEMENT
  • CBN and the FMAWR collaborate to ensure the
    success of the programme.
  • Day to day implementation of the Scheme, the
    Development Finance Department of the Central
    Bank and Technical Implementation Committee (TIC)
    headed by Director Development Finance Dept.
  • The Secretariat of TIC is located in the
    Secretariat of the Commercial Agriculture
    Development Programme (CADP) of the FMAWR. TIC
    reports to the Project Steering Committee (PSC)
    which is the highest policy organ.

10
MANAGEMENT CONT
  • The PSC meets quarterly to review progress,
    consider proposals from the Technical
    Implementation Committee (TIC) and make changes
    if required in the running of the programme, give
    approvals and is responsible for the overall
    direction of the Scheme.
  • Credit support to the target commodities and
    sub-sectors would be administered along the
    entire value chain of Production, Storage,
    Processing, Market and Enterprise Development.

11
ELIGIBILITY CRITERIA FOR PARTICIPATING BANKS
  • Liquid assets
  • Branch network
  • Agricultural lending infrastructure
  • Total assets
  • Agricultural lending experience
  • Supplementary credit to augment agricultural
    finance

12
ELIGIBILITY FOR PARTICIPATION FOR PROJECTS
(CHECKLIST)
  • Not less than N350 million for an integrated farm
    with prospects of growing the assets to N500
    million within the next three years
  • N200 million for non-integrated farms/
    agro-enterprise having the prospect to grow the
    net asset to N350 Million in the next three years
    .

13
ELIGIBILITY FOR PARTICIPATION FOR PROJECTS
(CHECKLIST)
  • Be a limited liability company and complies with
    the provision of the Company and Allied Matters
    act (1990).
  • Have a clear business plan.
  • Provide up-to-date record on the business
    operation, if any.
  • Have out growers programme, where appropriate.
  • Satisfy all the requirement specified by its
    lending Bank.

14
ELIGIBILITY FOR PARTICIPATION FOR PROJECTS
(CHECKLIST)
  • Applicants that meet the pre-qualification
    criteria would then be required to
  • Meet all the conditions precedent to loan
    disbursement by the participating banks (PB).
  • An encouraging aspect of this Scheme is a 40
    grant component that will be provided by the
    Federal Government to successful applicants,
    depending on the project.

15
MODALITIES TENOR
  • Agricultural loans to be granted shall not exceed
    9 per annum interest rate, inclusive of all
    charges
  • Loans under the CACS shall be for a maximum
    tenor of seven (7) years.
  • The working capital facility shall be for one
    year with provision for roll-over. The Scheme
    also allows for the moratorium in the repayment
    of loans.

16
ACCEPTABLE COLLATERAL
  • A charge on land in which the borrower holds a
    legal interest or
  • A right to farm, or a charge on the land
    including fixed assets,
  • crops or livestock.
  • A charge on the movable property of the borrower.
  • A life insurance policy, a promissory note or
    other negotiable security
  • Stocks and shares
  • Any other collateral acceptable to the
    participating banks.
  • Note that PBs take all credit risks under the
    Scheme

17
PROCEDURE FOR APPLYING FOR THE LOAN
  • All applications for loans under the scheme shall
    be made to the PBs
  • in duplicates.
  • One copy of which will be stamped by the PB
    concerned and forwarded to the Development
    Finance Department of CBN and CADP Secretariat of
    the FMAWR.

18
NEW DEVELOPMENTS
  • States are no longer to participate under the
    Scheme as a result of their un-preparedness to
    issue ISPO that will enable their smallholder
    farmers borrow under the Scheme.
  • FMA WR, is to develop 385 Farm Nucleus Estates
    (FNEs) in every two local governments in the
    country. This component is expected to commence
    with 24 pilot projects.
  • The FNEs are expected to attract a new generation
    of entrepreneurs to engage in farming as a
    business, generate employment, minimize
    rural-urban migration, and consolidate farms,
    farmers and farming requirements within the
    estate to leverage on economies of scale and
    market linkages.

19
NEW DEVELOPMENTS (Contd)
  • Each FNE will occupy 2,000-3,000 hectares of land
    (to be provided by the State Governments with
    built up infrastructures), accommodated farmers
    would be organized into production clusters,
    input suppliers and marketers so as to enjoy
    subsidized inputs, foster relationships
    themselves,
  • FNEs will also have access to storage and
    processing facilities, and physical and virtual
    markets (commodity exchange).

20
ACHIEVEMENTS
21
THE END
  • THANK YOU FOR LISTENING
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