FirstBank: Supporting Agribusiness financing with range of products

First Bank of Nigeria Limited offers different range of products to support the agric business in its efforts to grow the nation’s economy. AMAKA IFEAKANDU looks at the bank’s products targeted at growing agricultural business in the country.

Globally, the agricultural sector plays a pivotal role in the development of the economy of every country. The Nigeria agricultural policy provides among others, the adequate financing of agriculture. The primary goal of agricultural financing policies in Nigeria is to establish an efficient system of sustainable agricultural financing schemes, programme and institutions which could provide micro and macro credit facilities for the small , medium and large scale producers, processors as well as marketers.

Support for agriculture is widely driven by the public sector, which has established institutional support in form of agricultural research extension, commodity marketing , input supply, land use legislation to fast track development of agriculture in the country.

But successive governents in Nigeria at the federal, state and local levels have not been able to adequately address the specific constrains affecting the sector in an attempt to increase agricultural production in the country.

Although, the Central Bank of Nigeria (CBN) through its intervention funds and other schemes such as Anchor borrower, Commercial Agriculture Credit Scheme among others has impacted positively to the growth of agricultural sector, but it is not enough for the sector to make significant contribution to net foreign exchange earnings for the nation’s economic growth.

Benefits of agriculture
Agriculture contributes immensely to the nation’s economy in various ways. The sector provides food for the increasing population, supply adequate raw materials, land labour input to a growing industrial sector, a major source of employment, generation of foreign exchange earnings and provision of market for the products of the industrial sector.

The sector contributes 40 per cent of the Gross Domestic Products and employ about 70 per cent of the working population in Nigeria. Agriculture is also the largest economic activity in the rural areas where almost 50 per cent of the population lives.

FirstBank’s Agriculture Support Schemes
First Bank of Nigeria Limited, Nigeria most valuable brand, offers a range of products and services designed to help agricultural business yield better results in the country.

The bank’s products targeted at developing agriculture sector and other agric schemes introduced by federal government. Some of the products nclude; Maize Aggregation Scheme (MAS), Non-Oil Export Stimulation Facility (NESF), Commercial Agriculture Credit Scheme, Export Facilitation Initiative (EFI) among others.

The essence of growing the sector is to enable it contribute its quota to the economic growth of the country.

Maize Aggregation Scheme (MAS)
The Maize Aggregation Scheme (MAS) is for feed millers, poultry farmers, silos and warehouse operators and confectionery companies to enable them have access to affordable credit for the purchase of home-grown maize to promote the Federal Government of Nigeria’s National Food Security Programme (NFSP).

The scheme was set up to Stabilize prices of maize and make its production profitable for farmers, Increase local production of maize, provide credit facilities to feed millers, poultry farmers, silo and warehouse operators, Integrated feed millers and confectionery companies using maize as their major component at single digit interest rate as well as enhance national food security.

The Non-Oil Export Stimulation Facility (NESF)
The Non-Oil Export Stimulation Facility (NESF)) was introduced by the CBN to diversify the revenue base of the economy and to expedite the growth and development of the non-oil export sector.

The facility designed to help redress the declining export financing and reposition the sector to increase its contribution to economic development. The fund comprises the short tenured working capital for 12 months as well as importation of plants & machinery for processing of exportable goods at all-in-interest rate of 9 per cent per annum. It is meant to improve export financing, increase access of exporters to low interest credit and offer additional opportunities for them to upscale and expand their businesses in addition to improving their competitiveness.

Features/ target market
The fund has lending Limit of 70 per cent of the total cost of the project or transaction subject to a limit of N5 billion with a maximum single digit interest rate of 9 per cent, single obligor limit of up to N5 billion and fund will be available till 2027.

According to available data from FirstBank’s website, the eligible transactions that shall qualify for funding under the NESF shall include:export of goods processed or manufactured in Nigeria, export of commodities and services, which are allowed under the laws of Nigeria.

Imports of plant & machinery, spare parts and packaging materials required for export-oriented production that cannot be sourced locally, resuscitation, expansion, modernisation and technology upgrade of non-oil export.

Others are export value chain support services such as transportation, warehousing and quality assurance infrastructure, working capital/stocking facility, and structured trade finance arrangements.
Export Facilitation Initiative (EFI).

The funding is to increase capacity in the industry for export and foreign exchange generation. The CBN and chief executive officers of banks approved the commencement of EFI at the 343rd bankers Committee meeting held in April 4th 2019 to compliment government effort to engender growth in the non-oil sector of the economy as well as enhance foreign earnings and employment generation in the cocoa, cashew and oil palm plantation production industry.

The funding is to increase capacity in the industry for export and foreign exchange generation. The fund attract single digit interest rate of nine per cent maximum with no obligor limit applicable. The fund has loan tenor of up to 10 years, up to three years moratorium period and the loan can be for land acquisition and cultivation, milling and refinery capacity or smallholder farmers aggregation.

Commercial Agriculture Credit Scheme
The scheme is a special credit intervention fund of originally N200 billion created by the Federal Government of Nigeria to fast track the development of the agricultural sector of the economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate.

The key agricultural commodities covered under the scheme are production which include Cash crops: Cotton, Oil palm, fruit Trees. rubber, sugar cane, Jatropha curcas and Cocoa, Food Crops: Rice, Wheat, Cassava, Maize/Soya, Beans/Millet, Tomatoes and Vegetables, poultry: Broilers and Eggs productionL, ivestock: meat, Dairy and Piggery aquaculture: Fingerlings and Catfish .The fund will also used for processing and farm input supplies such as feed-mills development, threshing, pulverisation and other forms of transmutation for value addition. Others are Marketing Agricultural commodities under the focal investment areas. Under the fund management, storage Commodities, Agro-Chemicals and Warehousing. the bank said that farmers can use it for buying fertilizers, Seeds/Seedlings, Breeder Stock, Feeds, Farm equipment & Machineries.

The fund, under the scheme, attracts single digit interest rate of nine per cent maximum, sngle obligor limit of up to N2 billion for medium and large scale private sector enterprises and N1billion for state governments. The participating private sector entity, according to the bank must have a minimum farm asset base of N50 million excluding farmland. The bank said Irrevocable Standing Payment Order (ISPO) is required in the case of State Governments while the fund will be available till 2025 with loan tenor of up to 5 years.

FirstBank’s view
Managing Director, First Bank of Nigeria Limited, Dr Adesola Adeduntan, while speaking at the second edition of agric expo organised by the bank, said First Bank commenced operations over 124 years ago with a major strategic focus on financing agricultural development, as well as enabling farmers and agro-businesses.

He said the expo is indicative of bank’s commitment to increasingly collaborate with public and private sector partners to fully restore the prime role of the agricultural sector as the mainstay of Nigeria’s economy.

“I am pleased to note that agricultural financing across all value chains remains a core part of our business today. Following our priority as a continuous financier of credit worthy agro-allied businesses, our team of dedicated agricultural professionals specialising in various fields of agriculture are strategically located to identify and support agricultural enterprises covering across all regions of Nigeria, with a suite of customised sector and customer friendly agricultural financing solutions.

“FirstBank has a large base of existing small, medium and commercial agribusiness clients across Nigeria operating in all segments of the agricultural value chain covering primary production, storage, processing, packaging and agro export, amongst others”.

Adeduntan said that in partnership with public sector institutions, the bank has supported several state governments on agricultural development trust fund scheme, an initiative designed to provide credit facilities to small scale farmers who do not have collateral.

“Indeed, under the Federal Government’s Commercial Agriculture Credit Scheme for long tenored credit facilities to commercial agricultural enterprises – at single digit interest rate – FirstBank has supported over 23 per cent of all the enterprises supported by all the banks put together. The projects spread across input supplies, primary production, processing and marketing. Obligors include small, medium and large scale enterprise in the agricultural value chain.”

“I am happy that with these experiences, FirstBank worked immensely to support the Central Bank of Nigeria in actualizing the efforts of reviving all the value–chains as envisioned by the Federal Government of Nigeria.

“In addition, following the policy for playing down on importation of some of the commodities and encouragement of exportation of agricultural commodities, FirstBank is at the forefront of adopting the supportive schemes newly introduced by the Central Bank, like the Non-Oil Export Stimulation Facilities (NESF)”, he concluded.

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