THE GOALS OF AGRICULTURAL CREDIT GUARANTEE SCHEME FUND DECREE
The goal of the Fund is to provide guarantee in respect of loans granted by any bank for agricultural purposes as defined below. With the aim of increasing the level of bank credit to the agricultural sector. “Loan” under the decree includes advances, overdrafts and any credit facility and should be taken as such wherever it is used in these guidelines and other circulars.
The primary objectives of the Scheme are to:
- Fast-track the development of the agricultural sector of the Nigerian economy by providing credit facilities to large-scale commercial farmers at a single digit interest rate;
- Enhance national food security by increasing food supply and effecting lower agricultural produce and products prices, thereby promoting low food inflation;
- Reduce the cost of credit in agricultural production to enable farmers exploit the untapped potentials of the sector; and
- Increase output, generate employment, diversify Nigeria’s revenue base, raise the level of foreign exchange earnings and provide input for manufacturing and processing on a sustainable basis.
SUPPORT THAT CAN BE PROVIDED TO ENCOURAGE FURTHER RURAL BUSINESS GROWTH
The Government can provide the following supports:
- Develop high-yield crops: Increased research into plant breeding, which takes into account the unique soil types of Africa, is a major requirement.
- Boost irrigation: With the growing effects of climate change on weather patterns, more irrigation will be needed. Average yields in irrigated farms are 90% higher than those of nearby rain-fed farms.
- Increase the use of fertilizers: As soil fertility deteriorates, fertilizer use must increase. Governments need to ensure the right type of fertilizers are available at the right price, and at the right times.
- Improve market access, regulations, and governance: Improving rural infrastructure such as roads is crucial to raising productivity through reductions in shipping costs and the loss of perishable produce. Meanwhile, providing better incentives to farmers, including reductions in food subsidies, could raise agricultural output by nearly 5%.