CBN Releases Guidelines On Lending To Cocoa, Palm Oil, Cashew Farmers

The Central Bank of Nigeria (CBN), on Monday, published guidelines for bank lending to specific bank lending for specific agricultural produce in a bid to support government’s efforts at boosting non-oil sector of the economy.
In a circular to all banks by Kelvin Amugo, Director, Financial Policy and Regulation Department with reference: FPR/DIR/GEN/CIR/07/030, titled: “Circular to all banks on the commencement of the export facilitation initiative (EF), the CBN list the focal commodities for value chain development as cashew, cocoa, palm oil, sesame seed and shea.
The move, it continued, is in line with the approval of the Bankers’ Committee at its 343rd meeting held on April 4, 2019, and is in a bid also enhance foreign exchange and generate employment.
“The commodities are to be funded under the approved guidelines of AGSMEIS, NESF and RSSF-DCRR in line with the approved limits in the Export Facilitation Initiated Funding Framework (EFIFF),” the circular added.
Under the EFIFF, according to the circular dated June 13, 2019, funding terms for cocoa include 7-10 year tenor for large and mid-sized players termed facility ‘A,’ for land acquisition and cultivation, 5-7 years each for large and mid-sized players (facility ) for milling and refining capacity and smallholder farmers (under Clusters via aggregation).
While all facilities under the initiative will enjoy 9% concessionary interest rates, ‘Facility A’ has a moratorium of three years with nil equity contribution and will be funded via AGSMEIS; “B” has one year on principal and between 10 and 20% equity contribution and is to be via NESF and DCCR; just as “C” enjoys two-year moratorium on principal, but equity contribution with AGSMEIS as funding source.
For oil palm farmers, “Facility A” has 7-10 year tenor; while “B” and “C” has 5-7 years; while all other conditions as for cocoa.
In the case of cashew, the interest rate is 9% for all three categories of facilities and funding source for cocoa. The tenor is, however, one year and 120-day cleanup cycle for all three categories; moratorium for “Facility A” is 120 days clean up cycle, for “B,” it is a 120-day cleanup cycle and 10-20% equity and 120 days cleanup cycle and nil equity contribution for “Facility C.”
For Shea, tenor for all three categories of facilities is one year with an option of a rollover, just as the interest rate remains 9%, just as only “Facility C” has 10-20% equity contribution requirement.
Sesame Seeds will enjoy one-year warehousing and four-year asset acquisition tenor for all funding categories and a one-year moratorium on the principal on asset acquisition across the three categories, nil equity for “Facility A,” and “C,” but 10-20% for “B.”

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