The Central Bank of Nigeria (CBN) has threatened to ban out rightly, Participating Financial Institutions (PFIs) from participating under its interventions 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 of interest rates higher than the prescribed nine 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 Anchor Borrowers’ Programme which was launched by President Muhammadu Buhari (GCFR) on November 17, 2015 is intended to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.
The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize 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 utilization of processors.
The guideline stated that the anchor borrowers’ fund shall be provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF).
Loan amount for each small holder 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% from the CBN and lend at a maximum of 9 percent per annum.