Stakeholders Seeks More NAIC, CBN Collaboration On CACS

Image result for Central Bank of Nigeria, CBN, and the Nigeria Agriculture Insurance Corporation, NAIC logo

Yemisi Izuora 

Stakeholders in the agriculture sector have called for more serious engagement with the Central Bank of Nigeria, CBN, and the Nigeria Agriculture Insurance Corporation, NAIC, to discuss operating guidelines of the Commercial Agriculture Credit Scheme, CACS. 

They say such engagement would assist to eliminate seeming ambiguities around the guidelines to facilitate better implementation of the intervention scheme. 

They also called on the Nigeria Agriculture Insurance Corporation, NAIC, to move a step towards establishing enduring business relationship with banks beyond the issue of CACS.  

Oriental News Nigeria reports that these are some of the considerations sought by participants at the recently organised workshops for CACS desk officers of commercial banks in Lagos and Kaduna states by NAIC. 

The CBN, in collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD) established the Commercial Agriculture Credit Scheme for promoting commercial agricultural enterprises in Nigeria, which is a subcomponent of the Federal Governments Commercial Agriculture Development Programme (CADP). 

The Fund was intended to complement other special initiatives of the CBN, in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small scale farmers, Interest Draw-back scheme, Agricultural Credit Support Scheme and other similar developmental initiatives.

The scheme is financed from the proceeds of the N200 billion, three year bond raised by the Debt Management Office (DMO), and is made available to participating bank(s), to finance commercial agricultural enterprises.

The CACS is intended to fast track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate;

 It is also expected to enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation and reduce the cost of credit in agricultural production to enable farmers exploit the potentials of the sector as well as increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.

A communique at the end of the exercises urged CBN not give blanket refusal on moratorium on repatriation of 2 per cent commission from the fund and should treat each case on its merit as no bank would ask for moratorium if there is no need for it.

Participants in particular requested that CBN should apart from the workshop organize another forum to further discuss the CACS guidelines in details to remove any ambiguity and also clear all the grey areas, also urged NAIC to consider extending cover to include some of the exclusions with payment of additional premium. Granting of cover to include these exclusions will be treated on case by case basis.

“In view of the fact that some loans incorporate salaries, etc in their application, NAIC should consider doing its insurance on line items,rather than giving a blanket cover for the whole loan volume.  In view of the fact that majority of Nigerian farmers are those who have not taken loans, NAIC should endeavour to get out of its comfort zone of concentrating only on agro-projects financed by credit and intensify its effort to reach this huge percentage of farmers”,the communique added.

Participants also said there is need for collaboration between banks and NAIC officials to adequately inform and fully educate farmers on their insurance policies with NAIC as some of these farmers have been claiming ignorance of the existence of such policies, and that NAIC should not see the favourable change in the CACS guidelines as a reason to remain complacent. It should continue to strive for greater achievements by rendering timely and sterling quality services to its clients.

Furthermore it said, “NAIC is advised on the need to be competitive with her premium rates, especially in all areas of General Insurances”, adding that NAIC needs to urgently invest in Information technology, ICT to help the Corporation drive its various business processes more efficiently.

 In its product development efforts, NAIC should consider developing products that would address pricing issues, the participants urged adding that banks should, as much as possible, monitor disbursed loans approved for farmers to ensure that such loans are actually expended on the project cited in the loans documents.

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