Anchor borrowers’ program is an initiative of the Central Bank of Nigeria (CBN) under the administration of President Muhammadu Buhari. The program is intended to provide farm inputs in cash (loan) or kind (for farm labour) to smallholder farmers to boost production of their commodities, stabilize inputs supply to agro-processors and address the country’s negative balance of payment on food. At harvest, the smallholder farmer supplies his/her produce to the agro-processor who pays the cash equivalent to the farmer’s account.
On July 13, 2020, Participatory Development Alternatives (PDA) mobilized smallholder farmers from rural communities in Afikpo North LGA, Ebonyi State for a training by CBN, NIRSAL and NAIC on Anchor Borrower’s program. The farmers reported to have learnt that a farmer must belong to a group or corporative of between 5 and 20 in order to access loans administered under the program. In addition, a group or corporative must have a minimum of 50 hectares in order to access this loan. The agriculture commodities included in this program are, but not limited to: cereals, cotton, roots and tubers, sugarcane, tree crops (oil palm, cocoa, rubber, etc.), legumes, tomatoes, livestock, and any other commodity that will be introduced by the CBN from time to time.
The Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) is a dynamic, holistic approach that does two things: helps to fix the agricultural value chain, so that banks can lend with confidence to smallholder farmers and encourages bank to lend to the agricultural value chain by offering them strong incentives and technical assistance. NIRSAL is a scheme that manages the CBN agriculture loans and ensures that it gets to the smallholder farmers at low or minimum interest. NIRSAL also ensures that the smallholder farmers access loans from other banks other than CBN, at low interest rates. This is made possible through their Credit Risk Guarantee (CRG) program.
Nigerian Agricultural Insurance Corporation (NAIC) is a specialized insurance corporation that protects the Nigerian farmer from effects of natural hazards by introducing measures which shall ensure a prompt payment of appropriate indemnity (compensation) sufficient to keep the farmer in business after suffering a loss. The smallholder farmers were encouraged by NAIC to ensure that they insure their farmlands through NAIC, because this will give security to their farm products in case of natural hazards. Similarly, the smallholder farmers were made to understand that it is only the certificate issued to them by NAIC after insuring their farms, that will serve as collateral for accessing CBN loans, or agricultural loans from other banks.
This training took place at Amachara Civic Center, Afikpo North LGA, Ebonyi State, Nigeria on July 13, 2020. PDA will continue to support the process in order to enable small-holder farmers access finance to boost productivity, increase income and contribute to the nation’s food security.
