Anchor Borrowers’ Programme was established in November 2015 by President Muhammadu Buhari to create a link between anchor companies. Those companies are involved in the processing and smallholder farmers (SHF) of the main agricultural products needed.
The objective of the programme is to provide agricultural inputs (materials or cash) to smallholder farmers. This is done to enhance the production of these products, maintain the supply of inputs agro-processors, and deal with the negative balance of the country of payments on foodstuffs.
Beneficiaries and Agricultural Commodities
Smallholder farmers producing important staple commodities are beneficiaries of this loan programme. Commodities like
- Legumes (Soybean, Sesame seed, Cowpea, etc.)
- Cereals (Rice, Maize, Wheat, etc.)
- Root and Tubers (Cassava, Potatoes, Yam, Ginger, etc.)
- Tree crops (Oil palm, Cocoa, Rubber, etc.)
- Livestock (Fish, Poultry, Ruminants, etc.)
These smallholder farmers must be in a group or cooperative to gain access to this loan.
Eligible Participating Financial Institutions (PFIs)
The loan will be distributed through these financial institutions:
- Microfinance Banks (MFBs)
- Deposit Money Banks (DMBs)
- Development Finance Institutions (DFIs)
The anchors are large-scale private integrated processors that have an agreement with SHFs to purchase the harvested products at the fixed prices or as verified by the PMT.
The State governments can serve as anchors if prescribed conditions are met.
The Loan Amount
The fund will be fed by the ₦220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF). The amount of the loan for each SHF is determined based on the economic viability of production, which will be agreed upon with the stakeholders.
Rate of Return
The rate of return under the ABP is expected to be based on the MSMEDF rate, which is currently 9% p.a. (all-inclusive, before and after disbursement). PFIs will receive 2% from the CBN based on a structure consistent with the principles of interest-free banking, and financing at a maximum rate of 9% p.a. (all-inclusive)
The tenor of financing under the ABP corresponds to the maturity of the identified goods or is agreed with the parties involved and does not exceed 60 months.
Method of Repayment
Any loans granted to the SHFs will be repaid with the harvested produce, which, according to the provisions of the signed contract, must be mandatorily delivered to the anchor in a designated collection centre. The products that are going to be delivered must equivalent to the loan given as well as the interest.
How to Apply
Interested participants (input suppliers) have to submit a letter expressing their interest to obtain the loan to the office of the PMT for consideration and grant of local purchase orders.