Basic details on How to Access either NIRSAL AgroGeoCoop loan,CBN Non-Interest AADS Loan or CBN MSMEDF loan.
The Buhari Administration’s 2.3 Trillion Naira Stimulus Plan, known as the Nigeria Economic Sustainability Plan (NESP) was approved by the Federal Executive Council on June 24, 2020, and implementation has commenced.
Part of the 2.3 Trillion is what NIRSAL AgroGeoCoop, CBN Non-Interest AADS loan and the CBN MSMEDF loan access funds from which it has been financing the SMEs and farmers in form of loan to boost the nation's food reserves and economy.
Some of the current Programme initiated to revive the economy from the coronavirus shock are; the ongoing NIRSAL AgroGeoCoop loan for farmers, the CBN Non-Interest Accelerated Agricultural Development Scheme (AADS) Loan for youths in Agriculture and the CBN Micro, Small and Medium Enterprises Development Fund – (CBN MSMEDF) Loan.
These entire Programme are similar but their application procedures are different.
The first programme we should look at the application process is NIRSAL AGROGEOCOOP LOAN. This Programme is primarily to finance farmers and create good marketing link for their farm produces thereby enabling them sale their products at a good price.
THE PROCEDURE TO APPLY FOR THE NIRSAL AGROGEOCOOP LOAN ARE:
1. The key factor that qualifies a farmer for the NIRSAL Anchor Borrowers Programme is ability to provide the coordinate of a farm land, which includes the proper Latitude and longtitude of the farm land.
NIRSAL Plc often gets enquiries to what a farm’s GPS coordinates are and why it is imperative to record them.
a. Firstly, as it relates to NIRSAL Plc programmes, coordinates are the longitudinal and latitudinal points of each farm’s four extreme points.
b. Secondly, coordinates are recorded to know the exact position of each farmers’ land for accountability and to help in technology-driven remote monitoring.
As part of the NIRSAL Plc AgroGeoCoop®️ formation exercise, NIRSAL have been able to coordinate a lot of farm land by taking their coordinates to enable the farmers partake in the programme.
The exercise also allowed NIRSAL to confirm the land’s suitability for various farm production in line with NIRSAL’s Agricultural Commodity Ecological Areas (ACEAs).
What this means is that, the entire farm land details most be captured on NIRSAL database before a farmer can benefit from the ongoing Anchor Borrowers Programme.
This is because NIRSAL'S primary aim is to continuesly create a safe agribusiness investment environment for financiers; Through farmers & land verification project monitoring, BVN enrolment and putting risk-mitigating mechanisms in place to ensure investors get profitable returns.
The Anchor Borrowers Programme is an investment that needed to be protected. therefore, farmers' farm land are expected to be captured on NIRSAL farmers database with all the relevant details for easy monitoring of the project.
The second loan Programme to look at is the Non-Interest Accelerated Agricultural Development Scheme (AADS) Loan for the youths.
While NIRSAL is coordinating the AgroGeoCoop initiative for Agricultural financing, CBN also initiated another Agricultural financing program, which is similar to the ongoing NIRSAL AgroGeoCoop program with the aim of engaging a minimum of 370,000 youths in agricultural production across the country over the next three years in order to reduce unemployment among the youths in the country and increase agricultural production towards food security, job creation, and economic diversification. In furtherance to implementing this pivotal role in providing funding to assist the critical sector of the Nigerian economy, the Central Bank of Nigeria (CBN) introduced the Non-Interest Accelerated Agricultural Development Scheme (AADS Loan) for the youths.
The objective of the Accelerated Agricultural Development Scheme (AADS) scheme according to CBN, is to engage a minimum of 370,000 youths in agricultural production across the country over the next three years in order to reduce unemployment among the youths in the country and increase agricultural production towards food security, job creation, and economic diversification.
The NIRSAL AGROGEOCOOP Program and Accelerated Agricultural Development Scheme (AADS) program are sim
ilar in aims and objectives.
The ELIGIBILITY REQUIREMENTS for AADS loan are as follows:
i. Beneficiary must be a Nigerian youth with the ages of 18 to 35 years
ii. Sign an undertaking to abide by the terms of agreement of the Scheme
FOCAL ACTIVITIES
Two Agricultural Commodities where the state has comparative advantage
HOW IT WORKS
Mobilization and Clustering
i. State government to mobilize prospective young farmers with representation from all Senatorial Zones
ii. State Governments/FCT to provide agricultural land in contiguous locations in all senatorial Zones. Minimum of 100 hectares per cluster
iii. Prospective entrepreneurs (that meet the eligibility criteria) shall be grouped into clusters by commodity to be produced.
iv. State government to allocate 2-5 hectares of land per beneficiary
v. State Government to provide access roads, water sources and other infrastructure that will enhance agricultural production on the land
vi. States may charge a rental on land (Max. of N10,000 per ha) to defray the cost of land clearing and other infrastructure provided. Rental charged will be embedded in the Economics of Production (EoP) of the farmer.
Financing:
i. The PFIs will act as agents of the CBN in disbursing the financing to the beneficiaries, which shall be in kind.
ii. The PFIs shall purchase the inputs for on-selling to the beneficiaries, using CBN approved non-interest financing contract of Murabaha, Istisna’, etc at an all-inclusive rate of return of 9% p.a. For the financing of labour, the PFI shall use Service Ijarah or any other appropriate CBN approved contract for NIFIs with the same all-inclusive rate of return of 9%.
iii. Financing tenor is 6 months for grains and broiler production (rice, maize, soy bean etc); 18 months for cassava; 24 months for egg production and ruminants; 5 years for plantation crops etc
iv. Average financing size of N250,000 per ha for arable crops; N500,000 per unit for livestock; and N1.5 million naira for plantation crops like cocoa, cashew and oil palm.
Marketing:
i. Anchors/Processors/Aggregators shall sign uptake agreement with PMT.
ii. Produce off-take shall be on cash and carry basis.
iii. Contiguous nature of farms should reduce the logistics associated with aggregation.
Participating Financial Institution (PFI) shall:
i. Conduct due diligence in account opening and credit appraisal.
ii. Access funds from the CBN on Wakala basis for on-financing to eligible entrepreneurs.
iii. Ensure that payments are made directly to vendors in respect of equipment to be acquired with the purchased facility and the PFI takes lien on such assets.
iv. Charge the entrepreneurs the exact rate of return as prescribed by the CBN.
v. Monitor the beneficiaries to ensure full utilization of the facilities.
vi. Register beneficiaries’ BVN on the National Collateral Registry (NCR).
vii. Monitor projects.
Input Suppliers/Service Providers shall:
i. Ensure timely delivery of inputs/services
ii. Provide technical support on usage wherever it is required
iii. Replace deficient inputs supplied to beneficiaries within 5 working days of receiving such complaints by beneficiaries
iv. Provide effective customer services to feedback and complaints management
Anchors/Processors shall:
i. Sign off-take agreement with the PMT
ii. Off-take produce at the prevailing market price or average of 3 prices within the State
iii. Make payment for all produce collected within 5 working days of collection
iv. Provide logistics for produce aggregation and evacuation
v. Provide technical support for harvesting and handling of produce
Beneficiaries shall:
i. Be responsible for the management of the farm
ii. provide third party guarantor for repayment of financing facility.
iii. Cross guarantee one another
iv. Must agree to work with extension workers
v. Commit to abide by the terms of agreement and not to side sell produce
vi. Repay the financing facility as and when due by surrendering the output to the Anchor or State
The third loan Programme to look at is the Micro, Small and Medium Enterprises Development Fund, which is meant to finance 60% women in business.
After identifying the huge financing gap which hinders the development of MSMEs, the Central Bank of Nigeria (CBN) as part of its developmental role and mandate of promoting a sound financial system launched the Micro, Small and Medium Enterprises Development Fund – CBN MSMEDF Loan.
The objective of the Fund according to CBN is to channel low return funds to the MSME sub-sector of the Nigerian economy through Participating Financial Institutions (PFIs) enhance access by MSMEs to financial services;
a. Increase productivity and output of microenterprises;
b. Create jobs; and
c. Engender inclusive growth.
ELIGIBILITY
Eligible Enterprises In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, enterprises to be funded under the Scheme shall be:
a) Micro Enterprises
b) Small and Medium Enterprises (SMEs)
The following are eligible activities under the Fund: Microenterprises
● Agricultural value chain
● Cottage Industries
● Artisans
● Services
● Renewable energy/energy efficient product and technologies
● Trade and general commerce
● Other economic activities as may be prescribed by the CBN
The Fund is split into two components, Commercial and Developmental components.
Commercial Component
The Commercial Component shall constitute 90 per cent of the Fund which shall be disbursed in the form of Wholesale Funding to PFIs in the following ratio:
• 60% of the Fund: Women
• 40% of the Fund:
Others Objectives of Wholesale Funding are to:
a) Provide facilities to eligible PFIs for on-financing to MSMEs;
b) Improve the capacity of the PFIs to meet credit needs of MSMEs; and
c) Reduce the rate of financing to the PFIs and the beneficiaries
Developmental Component
The Developmental Component makes up the remaining 10 per cent of the Fund. It shall be earmarked for developmental programmes in form of Grants.
The 10% Grant shall be utilized for the general development of the MSME sub-sector in the following areas:
a) Capacity building
b) Development of appropriate regulatory regime for MSMEs financing
c) Financial literacy and entrepreneurship development
d) Mobilization, training and linkage of MSMEs to financial services
e) Research and Development of MSMEs-friendly financial innovations and products
f) Business Development and Advisory Services
g) Building of financial infrastructure to support the growth of MSMEs It shall also serve as incentive targeted at PFIs that demonstrate good performance under the Fund.
Note:
● Only 10% of the Commercial component of the Fund shall be channeled to trade and general commerce.
● Nigerian Agricultural Insurance Corporation (NAIC) Insurance is compulsory for primary agricultural production
START-UPS
PFIs are required to fund start-up projects under the MSMEDF. To encourage NIFIs, some incentives shall apply (see Section 3.0). PFIs are expected to accept charge on fixed and floating assets of the financed projects as collateral for start-ups. Collateral requirement from start-ups by PFIs (NIFIs) shall be educational certificates
i. SSCE
ii. National Diploma (ND)
iii. National Certificate of Education (NCE)
iv. National Business and Technical Examination Board (NABTEB)
v. Higher National Diploma (HND)
vi. University degree (NYSC Certificate where applicable) and a guarantor.
The start-ups to access the MSMEDF must present their Bank Verification Number (BVN).
MODE OF APPLICATION
a) The beneficiaries shall apply to the nominated PFIs for financing.
b) The PFIs shall appraise the applications for economic and financial viability.
c) The PFIs shall forward their applications through the State SPV to the CBN in the prescribed format.
d) CBN shall undertake a pre-disbursement assessment of financing requests presented to it by the SPVs on behalf of the nominated PFIs.
e) CBN shall approve and disburse funds directly to the PFIs’ correspondent bank accounts. -inclusive rate of return of 9% per annum.
FINANCING TENOR
The facility shall have a maximum tenor of one (1) year for micro enterprises. Financing tenor for SMEs shall be from one (1) to five (5) years with the option of moratorium as may be deemed necessary. PFIs shall re-access the fund upon full repayment of the outstanding.
FINANCING REPAYMENT
Principal and Profit repayment for micro and SME financings shall be annually.
All this loan are available to Nigerians who need fund to grow their business and create jobs.
Stay tuned for more updates!
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