FirstBank: Supporting agribusiness finance with a range of products

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First Bank of Nigeria Limited offers different ranges of products to support the agricultural enterprise in its efforts to develop the economy of the country. AMAKA IFEAKANDU examines the bank’s products for the growth of agricultural activities in the country.

Overall, the agricultural sector plays a central role in the development of the economy of each country. Nigeria’s agricultural policy provides, among other things, for the adequate financing of agriculture. The main objective of agricultural finance policies in Nigeria is to establish an effective system of sustainable agricultural finance schemes, schemes and institutions that could provide micro and macro credit facilities to small, medium and large scale producers, processors and traders.

Support to agriculture is largely driven by the public sector, which has put in place institutional support in the form of agricultural research extension, commodity marketing, input supply, land use legislation land to accelerate the development of agriculture in the country.

But successive governments in Nigeria at the federal, state and local levels have been unable to adequately address the specific constraints affecting the sector with the aim of increasing agricultural production in the country.

Although the Central Bank of Nigeria (CBN), through its intervention funds and other programs such as the anchor borrower, commercial agriculture credit scheme, among others, has had a positive impact on the growth of the agricultural sector, but it is not enough for the sector to make a significant contribution. net foreign exchange earnings for the country’s economic growth.

Benefits of farming
Agriculture contributes enormously to the national economy in various ways. The sector provides food for a growing population, provides adequate raw materials, land labor input to a growing industrial sector, a major source of employment, foreign exchange earnings generation and supply of a market for products from the industrial sector.

The sector contributes 40% of gross domestic product and employs about 70% of the labor force in Nigeria. Agriculture is also the main economic activity in rural areas where almost 50% of the population lives.

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

The bank’s products targeted agricultural sector development and other agricultural programs introduced by the federal government. Some of the products include; Maize Aggregation Program (MAS), Non-Oil Export Stimulus Facility (NESF), Commercial Agriculture Credit Program, Export Facilitation Initiative (EFI), among others.

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

Maize Aggregation Scheme (MAS)
The Maize Aggregation Scheme (MAS) is aimed at feed manufacturers, poultry farmers, silo and warehouse operators and confectionery companies to enable them to access affordable credit for the purchase locally grown maize to promote the Federal Government of Nigeria’s National Food Security Program (NFSP).

The program was set up to stabilize maize prices and make its production profitable for farmers, increase local maize production, provide credit facilities to millers, poultry farmers, silo and warehouse operators, integrated millers and confectionery companies using maize as their main activity. component at a single-digit interest rate while improving national food security.

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

The facility was designed to help address the decline in export financing and reposition the sector to increase its contribution to economic development. The fund includes short-term working capital for 12 months as well as the import of plant and machinery for the processing of exportable goods at an all-in interest rate of 9% per annum. It aims to improve export financing, increase exporters’ access to low-interest credit and provide them with additional opportunities to improve and grow their businesses in addition to improving their competitiveness.

Features/ target market
The fund has a lending limit of 70% 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%, a one-time obligor limit that may reach N5 billion and the fund will be available until 2027.

According to data available on the FirstBank website, eligible transactions eligible for financing under the NESF must include: export of goods processed or manufactured in Nigeria, export of commodities and services, which are permitted by the laws of Nigeria.

Imports of plant and machinery, spare parts and packaging materials needed for export-oriented production that cannot be purchased locally, resuscitation, expansion, modernization and upgrading technological level of non-oil exports.

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

The funding aims to increase the industry’s ability to export and generate foreign exchange. The CBN and chief executives of banks approved the launch of EFI at the 343rd meeting of the Bankers’ Committee held on April 4, 2019 to complement the government’s efforts to foster growth in the non-oil sector of the economy as well as improving foreign income and job creation in the production industry of cocoa, cashew and palm oil plantations.

The funding aims to increase the industry’s ability to export and generate foreign exchange. The fund attracts a single digit interest rate of up to nine percent with no applicable obligor limit. The fund has a loan term of up to 10 years, up to a three year moratorium and the loan can be for land acquisition and cultivation, crushing and refining capacity or aggregation of smallholder farmers.

Commercial Farming Credit Scheme
The program is a special credit intervention fund of an initial amount of N200 billion established by the Federal Government of Nigeria to accelerate the development of the agricultural sector of the economy by providing credit facilities to commercial agricultural enterprises in a single-digit interest rate.

The main agricultural products covered by the program are production, which includes cash crops: cotton, oil palm, fruit trees. rubber, sugar cane, Jatropha curcas and cocoa, food crops: rice, wheat, cassava, corn/soya, beans/millet, tomatoes and vegetables, poultry: production of broiler chickens and eggs, livestock: meat, dairy aquaculture and swine: fingerlings and catfish The fund will also be used for processing and supply of agricultural inputs such as the development of feed mills, threshing, spraying and other forms of value-added transmutation. Others are the marketing of agricultural products in priority investment areas. As part of fund management, Stockage Commodities, Agro-Chemicals and Warehousing. the bank said farmers can use it to purchase fertilizers, seeds/seedlings, breeding stock, animal feed, farm equipment and machinery.

Features
The fund, under the scheme, attracts a single digit interest rate of up to nine percent, a single obligor limit of up to N2 billion for medium and large private sector companies and N1 billion for state governments. The participating private sector entity, according to the bank, must have a minimum agricultural asset base of N50 million, excluding agricultural land. The bank said the irrevocable standing payment order (ISPO) is required in the case of state governments, while the fund will be available until 2025 with a loan term of up to 5 years.

FirstBank’s point of view
Managing Director of First Bank of Nigeria Limited, Dr. Adesola Adeduntan, during the second edition of the agricultural exhibition organized by the bank, said that First Bank started its operations more than 124 years ago with a strategic focus major on financing agricultural development, as well as farmers and agro-industries.

He said the exhibition is indicative of the bank’s commitment to working increasingly with public and private sector partners to fully restore the paramount role of the agricultural sector as the backbone of the Nigerian economy.

“I am delighted to see that agricultural finance across all value chains remains at the heart of our business today. In line with our priority as the continued financier of creditworthy agri-allied businesses, our team of dedicated agricultural professionals specializing in various fields of agriculture are strategically located to identify and support agribusinesses spanning all regions of Nigeria, with a suite of custom sectors and user-friendly agricultural finance solutions.

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

Adeduntan said that in partnership with public sector institutions, the bank has supported several state governments under an agricultural development trust fund program, an initiative designed to provide credit facilities to smallholder farmers. which have no warranty.

“Indeed, under the Federal Government’s Commercial Agriculture Credit Program for long-term commercial agricultural business credit facilities – at a single-digit interest rate – FirstBank has backed more than 23% of all the companies supported by all the banks combined. The projects concerned input supply, primary production, processing and marketing. Debtors include small, medium and large enterprises in the agricultural value chain.

“I am pleased that with these experiences, FirstBank has worked tremendously to support the Central Bank of Nigeria in delivering on efforts to revive all value chains as envisioned by the Federal Government of Nigeria.

“Furthermore, in line with the policy of minimizing the import of certain commodities and encouraging the export of agricultural products, FirstBank is at the forefront of adopting the Bank’s newly introduced support programs. central, such as non-oil export stimulation facilities. (NESF),” he concluded.


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