CBN Helps When Banks Fail In Lending – Charles Ugwu

Making financial resources available for financing project and promoting development is Part of the role of the banking system. The banks are expected to stimulate investment and channel same to key sectors of the economy.

But the banks seem not to be doing enough in terms of making finance available to the real sector of the economy.

Charles Ugwu, chairman, Ebony Agro Industry Limited, narrated his experience of trying to access loans from bank, to journalist who went on excursion to rice mill factory in Abakaliki in Ebonyi State.

He said, “Although the Federal Government gave us loan to pay for part of the machinery when the machines came, no bank was willing to support the project. They wanted all the collaterals in the world including my grandmother’s certificate. They wanted everything in the world in Ikoyi, Victoria Island, and in Abuja. I did not have that. But CBN stepped in and created the Commercial Agriculture Credit Scheme (CACS). Without the CACS fund, this mill plant will not run; no mill will run because we need low interest funding to buy paddy.”

As part of its developmental role, the Central Bank of Nigeria (CBN) in collaboration with the Federal Government of Nigeria, represented by the Federal Ministry of Agriculture and Rural Development (FMARD), established the Commercial Agriculture Credit Scheme, for promoting commercial agricultural enterprises in Nigeria, which is a sub–component of the Federal Government of Nigeria Commercial Agriculture Development Programme (CADP).

The fund will complement other special initiatives of the Central Bank of Nigeria in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS), which is mostly for small-scale farmers, Interest Draw-back Scheme and Agricultural Credit Support Scheme, among others. The fund is financed from the proceeds of the N200 billion three-year bond raised by the Debt Management Office (DMO). The fund shall be made available to the participating bank(s) to finance commercial agricultural enterprises.

Godwin Emefiele, governor of CBN, noted at the last meeting that the Apex bank has since 2009 expanded its balance sheet to bail out the financial system and support growth initiatives in the economy.

“While stimulating economic growth and creating a congenial investment climate always is and remains essentially the realm of fiscal policy; monetary policy in all cases only comes in to support sound fiscal policy. Nevertheless, the Bank has and shall continue to deploy its development finance interventions to complement the overall effort of fiscal policy towards reinvigorating the economy,” he said.

Ugwu commended the CBN for providing the start up funds through the CACS and the Anchor Borrowers Programmed, which he said, is helping farmers to realise their dreams.

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