Getting The Funding For Your Agric-oriented Project

With the government’s increasing focus on funding the agriculture sector, getting the required funding for your agriculture related project is no longer as hard as it used to be. Asides from the conventional banks and microfinance banks, you can get the required funding from the Bank of Agriculture (BOA) which was established specifically for that purpose.

Recently, the Central Bank of Nigeria (CBN) had encouraged Nigerians to seek out funding from specialised and development banks for low interest facilities. This is because these institutions are solely focused on building businesses for the development and growth of the economy. For small businesses in the agriculture sector and value chain, the Bank of Agriculture is the best option.

BOA’s mandate is to provide agricultural credit facilities to support all agricultural value chain activities, provide non-agricultural micro credit, savings mobilization, capacity development through cooperative development of agricultural information systems and provision of technical support and financial advisory service.

Dubbed the ‘Farmers’ Bank’ it was established to stimulate the growth of agriculture in the country and is majorly owned by the Central Bank of Nigeria and the Ministry of Finance. The bank gives out loans which range from agricultural micro loans, to non-agricultural micro loans. It also provides funding for Small and Micro Enterprises (SME) as well as loans to cooperative and farmers’ groups and on- lending loans.

To access funding from BOA, there are certain things to take into consideration. For the Direct Credit Product of the bank which is targeted at SMEs and provides loans ranging from N250,000 to N50 million. The Direct Credit allows individuals a maximum of N5 million which is the minimum for corporate organisations.

With a tenor of five years and an interest rate of 14 per cent for agricultural production and agro-processing while commodity marketing attracts a 20 per cent interest, obtaining the loan requires current tax clearance certificate, last three years audited statement of account or statement of affairs required. The facility is collateral backed.

The bank also has a facility that is targeted at encouraging Nigerian youths to get involved in agriculture either as an investment or as a business. The facility named Youth Agricultural Revolution Nigeria (YARN) has a loan limit of N1 million.

To access the facility, beneficiaries are expected to be small holders as defined under the Nigeria Incentive Risk Sharing for Agricultural Lending (NIRSAL) guidelines. To facilitate unhindered access by these target groups, the beneficiaries need not have collaterals but must provide acceptable guarantors.

The loans are accessible by individuals or groups. The individuals in the group can get N1 million each subject to technical determination of scope and financial requirements of the project. The loans can be accessed by individuals and groups in line with NIRSAL Credit Risk Guarantee (CRG) and Interest DrawBack Program (IDP).

For this facility which has a 12 per cent interest, the loan period, grace or moratorium on the products will be determined based on the project type and NIRSAL provides a 75 per cent credit guarantee.