The Central Bank of Nigeria (CBN) on Tuesday released guidelines for the Accelerated Agricultural Development Scheme (AADS). The Apex bank had on Thursday 18 June announced that it has launched a framework for the integration of non-interest window in all its intervention programmes.
The purpose of the AADS which targets Nigerian youths between the ages of 18 to 35 years 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.”
The scheme which involves collaboration amongst the state government, the CBN and other relevant stakeholders to create job in the agricultural sectors, aims at increasing agricultural production towards food security, job creation and economic diversification.
Operational frame work of the scheme
According to CBN publication;
- State government will mobilize prospective young farmers with representation from all Senatorial Zones
- State Governments/FCT will provide agricultural land in contiguous locations in all senatorial Zones. Minimum of 100 hectares per cluster
- Prospective entrepreneurs (that meet the eligibility criteria) shall be grouped into clusters by commodity to be produced.
- State government to allocate 2-5 hectares of land per beneficiary
- State Government to provide access roads, water sources and other infrastructure that will enhance agricultural production on the land
- 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.
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- The Participating Financial Institution (PFIs) will act as agents of the CBN in disbursing the financing to the beneficiaries, which shall be in kind.
- The PFIs shall purchase the inputs for on-selling to the beneficiaries, using CBN approved non-interest financing contract of Murabaha, Istisna’ (Sharia compliant loans) etc at an all-inclusive rate of return of 9% p.a. For the financing of labour, the PFI shall use Service Ijarah (Sharia compliant) or any other appropriate CBN approved contract for NIFIs with the same all-inclusive rate of return of 9%.
- 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
- 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.
- Anchors/Processors/Aggregators shall sign uptake agreement with (Project Management Team (PMT).
- Produce off-take shall be on cash and carry basis.
- Contiguous nature of farms should reduce the logistics associated with aggregation.
- Beneficiary must be a Nigerian youth with the ages of 18 to 35 years
- Sign an undertaking to abide by the terms of agreement of the Scheme
The stakeholders for the scheme and their duties;
Central Bank of Nigeria (CBN) who will provide the funding and act as managing agent.
Federal Government of Nigeria (FGN); Provide strategic direction for the implementation of the Scheme through the Presidential Task Force
State Governments/FCT; Express interest to participate to the Presidential Task Force and choose 2 commodities or farming enterprise where the State enjoys comparative advantage, provide enabling environment for implementation of the scheme, inaugurate the Project Management Team and provide cleared and contiguous farm lands for beneficiaries under the Scheme among others.
Project Monitoring Team (PMT); Coordinate the implementation of the Scheme and ensure its success, sign agreements with input suppliers, service providers, and anchors/processors that are willing to participate under the Scheme which would stipulate that payment will be made with 30 working days of delivery, liaise with input suppliers, service providers, commodity associations, and anchors/processors to ensure fair pricing, timely delivery of inputs and effective marketing of produce among others
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Participating Financial Institution (PFI); Conduct due diligence in account opening and credit appraisal, access funds from the CBN on Wakala basis for on-financing to eligible entrepreneurs, 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, and charge the entrepreneurs the exact rate of return as prescribed by the CBN among other.
Input Suppliers/Service Providers; ensure timely delivery of inputs/services, provide technical support on usage wherever it is required.
Anchors/Processors; sign off-take agreement with the PMT, off-take produce at the prevailing market price or average of 3 prices within the State, make payment for all produce collected within 5 working days of collection, provide logistics for produce aggregation and evacuation.
Beneficiaries; be responsible for the management of the farm, provide third party guarantor for repayment of financing facility, ross guarantee one another, must agree to work with extension workers v. Commit to abide by the terms of agreement and not to side sell produce, repay the financing facility as and when due by surrendering the output to the Anchor or State.
Nigeria Agricultural Insurance Corporation (NAIC); provide insurance cover for agricultural enterprises.
For more details on the scheme and the duties of stakeholder read CBN publication.