The Central Bank of Nigeria (CBN) has reviewed its guidelines for Commercial Agriculture Credit Scheme (CACS).
The announcement made in a memo signed by the apex bank’s Financial Policy and Regulation department said the move is to enhance the effectiveness of the Scheme by mitigating the risks faced by participating financial institutions in financing the agriculture sector.
“This revision affects Sections 16 and 17 of the Guidelines and introduces significant changes, including a requirement that henceforth, the Nigeria Agricultural Insurance Corporation (NAIC) should provide insurance cover for all agricultural facilities/projects under the CACS in line with the NAIC Act.
“In furtherance of the above revision, the CBN hereby directs the immediate commencement of insurance premium payments by borrowers under the CACS scheme”, it stated.
The Commercial Agriculture Scheme is financed from the proceeds of the N200 billion, three year bond raised by the Debt Management Office (DMO). The Fund is made available to participating bank (s), to finance commercial agricultural enterprises.
Its objectives include fast tracking development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate; enhancing national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
The other objectives include reducing the cost of credit in agricultural production to enable farmers exploit the potentials of the sector; and Increasing output, generating employment, diversifying the revenue base, increasing foreign exchange earnings and provide input for the industrial sector on a sustainable basis.