The Central Bank of Nigeria, CBN, in line with its intervention strategy in the agriculture sector has disbursed N12.5 billion under the paddy Aggregation Scheme, PAS, a special window under the Commercial Agriculture Credit Scheme, CACS.
The PAS is a working capital facility for Integrated Rice Millers for a tenor of six months and offered at an interest rate of 9 per cent while the single obligor limit under CACS is to be waived for beneficiaries under the scheme.
Giving these details at a 3 day capacity building workshop for CACS agriculture desk officers of Commercial Banks organized by the Nigeria Agriculture Insurance Corporation, NAIC, in Lagos, Mr. Ademuyiwa Adeleke Project Manager, in the Development Finance Department, DFD, of the Central Bank of Nigeria,
CBN, explained hat the N12.5 billion already disbursed was meant to develop five projects out of N20.875 billion request received under the scheme as at September 30, 2017.
Adeleke, further explained that the paddy Aggregation Scheme, was initiated as a measure by federal government to enhance food security and most importantly ensure competitiveness of locally milled rice, in which a presidential Emergency Committee headed by Vice President Yemi Osinbajo.
The committee was to analyze the local production of rice sub-sector and propose medium to long term strategies that will reduce production costs of locally produced rice.
To further promote the initiative the Committee of Governors, COGs, at its 515th meeting in July this year, considered and approved a memorandum on PAS as a special window under CACS, he said.
Adeleke, further informed that government had approved key performance strategies for the scheme which include Medium Term Strategies, in which the CBN is expected to provide a special mop up facility at single digit to enable integrated Rice Millers purchase Paddy during harvest period of low prices, and ramp up its Anchor Borrowers Programme nationwide to reach more small holder rice farmers.
In the long term strategy of the scheme, government is to implement fiscal policies and diplomatic measures to curb illegal smuggling of rice by tightening border surveillance, engage governments of Benin and Cameroon and muster political will to prosecute rice smugglers.
Adeleke also noted that government under the long term strategy is expected to ramp up the presidential fertilizer initiative programme to further reduce cost of production for rice farmers and also focus on Infrastructural support through irrigation facilities and feeder roads to support dry season rice farming to enhance production output.
Adeleke said that it is envisaged that the scheme would help reduce cost of Funds for Paddy mop up from 25 per cent to 9 per cent as well as provide millers adequate cash flow to mop up Paddy during the harvest season when prices are at the lowest and also reduce high cost of local rice production to make prices affordable and competitive with imported and smuggled brands.
Speaking on the CACS initiative, Adeleke said the scheme was established in collaboration with the federal ministry of agriculture and rural development in 2009 with the aim of promoting commercial agricultural enterprises in Nigeria which is a a sub-component of governments Commercial Agriculture Development Programme CADP.
The scheme was financed from the proceeds of the N200 billion, three year bond raised by the Debt Management Office, DMO, which was made available to the participating banks to finance commercial agricultural enterprises.
Adeleke stated that the overall objective of the CACS aims at fast tracking development of agricultural sector of the economy by providing credit facilities to commercial agricultural enterprises at single digit interest rate.
It is also expected to enhance national food security by increasing food supply and affecting lower agricultural produce and products prices thereby promoting low food inflation as well as help increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis, among others.