Recipients of loans under CBN intervention regimes may ultimately not have to pay interest on their facility. Indeed, the umbrella bank is about to complete work on a framework that will relieve it of its obligation to pay interest on such intervention loans.
In particular, the Anchor Borrowers’ Program (ABP) and the Targeted Credit Facility (TCF aimed at providing a cushion against the Covid 19 pandemic) are most likely to benefit from this interest exemption.
It will also advance more than 432 billion naira through commercial banks to farmers for the 2020 rainy season.
Isaac Okorafor, director of corporate communications for CBN, and his counterpart in the development finance department, told reporters yesterday in Abuja that CBN governor Godwin Emefiele had previously asked the development finance department to create the window without interest, in particular for the North. -west and northeast.
They spoke to reporters during an engagement session with rice, corn and cotton farmers as well as private presenters. Okoroafor said the apex bank will soon develop a framework for the operation and integration of interest-free banking into all of the bank’s programs, including ABP.
He noted that the bank was determined to push the economy to ensure Nigeria does not experience consecutive quarters of negative growth.
He added that to revive the economy, Emefiele had asked the bank’s development finance department and NIRSAL Micro-Finance Bank (NMFB) to speed up the loan approval process, in order to help restore businesses and livelihoods.
Okoroafor explained that the CBN believed that if the food problem was resolved, the price hike, which continued to fuel inflation, would be limited.
He added that the CBN is working to tackle the factors of instability in the economy and is determined to ensure that agriculture receives the necessary boost to pull the country out of recession.
He said: “The 2020 rainy agricultural season is particularly critical for the nation for several reasons. First, there has been a lot of lull in production due to the lockdown resulting from the COVID-19 pandemic.
“Second, there have been predictions that the global economy will go into recession and there have been predictions that the Nigerian economy will not be able to escape recession.
“At the CBN, we realize that the recession is actually knocking on Nigeria’s doors, but it can still be avoided or at least reduced since the recession is defined as two consecutive quarters of negative growth.
“What this means is that if we are able to avoid negative growth in any of the quarters, it means we have escaped a recession.
“And the CBN governor’s target, and who informs of the aggressive nature in which he is trying to increase support for agriculture and small business, is that we need to aggressively push the economy to avoid this recession.
“An aggressive development finance policy is what is needed and this is the goal of this rainy season program to ensure that our economy does not sink into recession.”
Likewise, Yusuf said the umbrella bank had received correspondence from concerned citizens about the need for an interest-free window, especially for COVID-19 funds, ABP and other response support programs. of the CBN.
He said: “We are working on it and in the coming weeks you will see some policies that we will be rolling out on interest free facilities. The work was finished. “
He said the 432 billion naira financing, which is a loan facility, would be rolled out across nine different commodities, such as rice, corn, cotton, oil palm, cowpea, and poultry. ‘breeding and fish.
He described the 2020 rainy season as the largest anchor borrower program since 2015, adding that more than 1.1 million farmers are expected to farm over one million hectares of land with combined production expected. of 8.32 million metric tons for the nine different products.
“It’s quite important if you look at what’s going on in the world, where the big traditional producing countries like Vietnam and Thailand for rice are closing their silos and closing their borders.
“So we expect to locally produce everything we need to eat, basic things like rice, cassava, cotton and maize.
“In 2015, when we took over the rice, we changed the rice yield; currently, we produce four metric tonnes per hectare, which was previously between one hectare and 1.5 metric tonnes per hectare. And so you can see the significant jump.
“A very important thing that we are also doing this year is to focus on yield to make sure that we get the farmers back to the farm.
“Take cotton for example, traditional yields were around 0.3 to 0.4 metric tonnes per hectare, but with the improved seeds that we provided in 2019 and that we will provide in 2020, we have grown to around two metric tonnes per hectare and so that’s an incentive for farmers.
“Most of the farmers who grew cotton last year were very successful and had enough money to pay off their loans and engage in other activities,” he said.
At the meeting, the Presidents of the Rice Farmers Association of Nigeria (RIFAN), Alhaji Alhaji Aminu Goronyo; Nigerian National Cotton Association (NACOTAN), Mr. Anibe Achimugu; The Maize Association of Nigeria (MAAN), Alhaji Bello Abubakar, and the Maize Growers, Processors, and Marketers Association of Nigeria (MAGPMAN), Dr Edwin Uche, have attested to the success of ABP, which they say has improved the value chains of their respective commodities.
While pledging their support for the continued implementation of PBA to generate jobs and create wealth, they pledged to ensure that loans collected by farmers are quickly clawed back in order to make the program sustainable.