Only 24% of loans under CBN anchor borrowers paid back – IMF

Only 24 per cent of loans collected by farmers under the anchor borrowers’ programme (ABP) of the Central Bank of Nigeria (CBN) have been repaid, a report by the  International Monetary Fund (IMF) has revealed.

This shows that 76 per cent of the loans have not been repaid.

This is contained in the international financial organisation’s latest country report titled ‘Nigeria: Selected Issues’.

The IMF said the report was based on the information available at the time it was completed on January 12, 2023.

The anchor programme was launched by President Muhammadu Buhari on November 17, 2015, to create a linkage between anchor companies involved in the processing and small-holder farmers of the required key agricultural commodities.

It was designed to provide farm inputs (in kind and cash) to boost production of the key commodities, stabilise input supply to agro-processors and address Nigeria’s negative balance of payments on food.

Last year, the CBN said the ABP increased rice milling plants from six to 50 in the last six years.
In the report, the IMF said agricultural credit in the country has not significantly succeeded in increasing production due to the difficulty in targeting the correct recipients.

It said that although the CBN allows farmers to pay in cash or give the central bank their produce of same value under the ABP, repayments have been very low.

It stated, “For the Anchor Borrowing Programme, repayment is also low at 24 percent, especially since repayment can be made in kind, thereby limiting the tenor of the loans to one year,” the report read.

“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).”

The IMF also said recent data (November 2020) from the central bank indicated that the repayment rate for the commercial agriculture credit (CAC) scheme was at almost 66 per cent.

It, however, said that since the loans started in 2009, the 66 per cent repayment rate was not a particularly high outcome.

The IMF said its cross-country analysis identified four levers for raising food security levels: raising per capita consumption, raising production yields, limiting food price inflation, and reducing reliance on food imports.
It said per capita consumption was far below comparator countries in Nigeria, and it could be stimulated through increased diversification.