Nigeria is blessed with fertile land that is good for planting. Farmers and agriculturists enjoy using their talent to good use. However, they are limited by several factors. One of the factors is the loan opportunity available to them. Finance is an important factor in creating job opportunities in the agricultural sector. Due to a lack of exposure, they find it hard to access the best loan offers suitable for them. Thankfully, this article is designed to discuss the different agricultural loans available to farmers in Nigeria.
Before we progress, let’s look at the reason farmers need Agriculture loans.
Why Is Agricultural Loan Needed?
Agriculture is one of the major sources of livelihood for developing countries, especially Nigeria. More than 50% of Nigerians are reliant on the agricultural sector for their food and survival. Entrepreneurs and peasants see agriculture as a means of earning a living.
Due to the risk attached to this business, many credit facilities have refused to give farmers loans. While this has reduced the ability to export food items, it has also caused inflation of farm produce in the market. Sometimes, the few financial services available to farmers have outrageous interest rates.
Offering credit facilities to farmers goes a long way in encouraging them. It also helps the country on a larger scale. How? It helps the country exports more goods thereby increasing the net profit of the country.
The next subheadings discuss the different agricultural loans available to farmers. Keep reading!
Top Agricultural Loans In Nigeria
This section of the article discusses the top 5 agricultural loans in Nigeria.
Bank of Agriculture
The Bank of Agriculture is one of the top agricultural banks in Nigeria. This bank has different loan products that can help farmers to meet their financial targets. The Bank of Agriculture’s vision is to finance the agricultural economy of the nation. Apart from financing, this bank also helps in the training of farmers and agriculturists alike. Another benefit of this bank is that it provides technical assistance to farmers.
The Bank of Agriculture is a very reputable financial institution that lends farmers money to start or grow their businesses. This bank also partners with a lot of financial institutions within the country.
Kind of Loan Offered By The Bank Of Agriculture
The Bank of Agriculture offers numerous loan offers ranging from:
Raw Material Purchase Loan
Production and Storage
International Trade Finance Credit
Stock Credit Facilities
Sugar Revival Credit
Leasing Fixed Asset.
If you intend to apply for one of these, ensure you visit the official website of the Bank of Agriculture.
Agricultural Credit Support Scheme
This is a loan platform established by the Federal Government. This platform aims to reduce the cost at which farmers produce raw materials. Additionally, this scheme is designed to help farmers export their products internationally. As stated earlier, it is a platform that the government uses to encourage farmers to produce more.
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If you are a farmer, then this loan is for you. This is because the interest rate of this loan is 8%. Not only farmers are eligible for this loan, but entrepreneurs are eligible for this loan too. However, banks would be required to evaluate candidates for their eligibility for the loan.
To apply for these credit facilities, visit your banks. Express your desire to obtain a loan from the Agricultural Credit Support Scheme. If you are eligible, you will be contacted.
Commercial Agricultural Credit Schemes (CACS)
If you are looking for a loan with a low interest rate, then this is for you. The primary objective of the Commercial Agricultural Credit Schemes is to enable farmers to obtain loans at low interest rates. The beauty of this scheme is that it is in partnership with the Central Bank of Nigeria (CBN) and the Federal Ministry of Agriculture. So you have nothing to worry about. The next subheadings talk about the objective of the Commercial Agricultural Credit Schemes.
The objective of the Commercial Agricultural Credit Schemes
The following are the objectives of the Commercial Agricultural Credit Schemes:
Low interest rate to farmers
To increase the development of the agricultural sector in Nigeria.
To increase the production of farmers across the country.
To create employment opportunities.
Agricultural Credit Guarantee Scheme Funds
This bank was created as a way to encourage commercial banks. How? It was set up to serve as a way to encourage commercial banks to lend money to farmers and agriculturists. Just in case the loan backfires, the Agricultural Credit Guarantee Scheme Funds were to act as a safety net. The scheme gives commercial banks 75% of their loan if the intended farm project does not yield returns.
The objective of the Agricultural Credit Guarantee Scheme Funds
Some of the objectives of this scheme include:
To motivate commercial banks to lend money to farmers. They do this by providing 75% of the loan amount to banks.
Make finance available for agricultural projects
Increase the number of agricultural projects.
The Nigerian Incentive-Based Risk Sharing System Agricultural Lending (NIRSAL)
The Nigerian Incentive-Based Risk Sharing System Agricultural Lending (NIRSAL) is one of the many loan schemes established by the Federal Government of Nigeria. The objective of this scheme was to encourage commercial banks and financial institutions to lend to the agricultural sector. It performs functions similar to the Agricultural Credit Guarantee Scheme Funds in that it shares risks.
The NIRSAL also provides a 75% risk-sharing basis to commercial banks that choose to lend finance to farmers. If you are interested in this platform, make sure you visit a commercial bank. Talk to the bank officer about your agricultural projects. You will be given a form to fill out. You would be shortlisted if you qualify for the loan.
Conclusion
The banks listed above would require some documentation before offering you the loan. Of course, you have to show them a copy of your business plan. Ensure you have a farm project worth investing in. Also, peruse the interest rate of every loan before penning your signature.
