CBN Introduces new risk mitigation to curb non-repayment of loans by farmers.

The Central Bank of Nigeria, CBN has developed a new risk mitigation model to curb non payment of loans by farmer

The CBN’s branch Controller in Makurdi, Benue state, Mr. Baba Titwu
who disclosed this over the weekend while addressing a meeting of rice cooperatives farmers in Makurdi, explained that the model starts from the farmer to the input suppliers, to the bank and to the up taker such that only the cost of labour would pass through the farmer.

He said the rest goes through the vendor of all the input to the farmer who will produce and will be taken up by the up taker such as MICAP Rice Company Makurdi who will pay directly into the b which in turn would deduct the loan and the interest accruing into it and release the balance which is the profit to the farmer.

According to Mr. Titwu, the scheme has an inbuilt-insurance cover.

. “So, for an event like flood or a farmer dies or something happens on the farm, the insurance premium the farmer had paid will take care of such eventuality, with about 90% of what such a farmer put into the project returned back to the bank”.
He said a monitoring team made up of all the key stakeholders in the rice value chain starting from the CBN, the borrower’s representative or cooperative society, input distributors and up taker would be set up to ensure that funds are judiciously applied from the start to the end.

The Branch Controller also explained that rather than buying all kinds of grains as it was done before now, “we are bringing input sellers and the best seedlings we can find anywhere in the country so that farmers are jot sold grains rather than planting materials while other inputs such as agro chemicals, fertilizer are meeting the right suppliers and vendors so that the yields at the end of the day will be okay.

He added that farmers would also go through training to understand farming as a business .
He decried a situation whereby when farmers are given six bags of fertilizer for their farm, they prefer to apply three and sell three which has necessitated the formation of monitoring team to curtail such behavior .

On his part, the chairman of MICAP Rice Company Limited, Chief Michael Aondoakaa said the overall objective of the policy is to reduce the amount of money used on forex and expressed the readiness of his company to partner with CBN with the aim of creating rice value chain where farmers will make money.