Development Finance Offices has been launched across Nigeria by the Central Bank of Nigeria (CBN) in order to move the administration of the Agricultural Credit Guarantee Scheme (ACGS) closer to farmers.
The CBN announced this guideline on the 22nd of November 2021. It said, “Apart from the Head Office of the Central Bank of Nigeria, Development Finance Offices have been established in all branches of the Central Bank to administer the Agricultural Credit Guarantee Scheme. The Development Finance Offices are manned by Officers who function under the overall control of the Branch Controllers of the Central Bank in each branch.
“In order to ensure that matters connected with the Scheme are dealt with expeditiously, the Officers will treat such matters in the state in which they are located, unless banks are otherwise directed.”
The apex bank explained that loans to be obtained for agricultural purposes must be actually used to achieve the subject objective of financing agricultural activities, as a five-year jail term awaits defectors.
The new guideline further states “Banks should remind prospective borrowers under the scheme that it is an offense for which one may be imprisoned for five years to apply the loan for purposes other than those for which they are given.”
It put a single obligor limit for non-tangible collateral at N100,000 “while the obligor limit for individual, group/co-operative or a corporate society is N50,000,000.00 (Fifty million naira only) for secured loans.”
The bank said that based on the Act, the liability of the Fund will be 75 per cent of the amount in default net of any amount realized by the bank from the security it got from the borrower, subject, in the case of a loan to an individual, a co-operative society or a corporate body, to a maximum of N50,000,000 (Fifty million naira only).
The Central Bank of Nigeria also explicitly stated that Revised Regulatory and Supervisory Guidelines of MFBs must be rigorously cohered, as it vividly specifies that the maximum principal amount for a microloan should not exceed N500,000.00 or 1% of the shareholders’ fund unimpaired by losses.
The Federal Military Government established the Agricultural Credit Guarantee Scheme Fund as the Agricultural Credit Guarantee Scheme Fund Decree 1977 before amendment in 13th June 1988, and 26th June 2019.