The Central Bank of Nigeria (CBN) has directed banks to commence funding for small holder farmers and companies producing five products under its export facilitation initiative (EFI).

The five products are palm oil, cashew, cocoa, sesame see and shea.

In a circular, the apex bank said EFI was part of government’s efforts to develop the non-oil sector of the economy and to increase foreign earnings and employment rate.

“The Bankers’ Committee at its 343rd Meeting held on April 4, 2019 approved the commencement of the Export Facilitation Initiative (EFI) to complement government’s efforts to engender growth in the non-oil sector of the economy as well as enhance foreign earnings and employment generation,” the circular read.

“Under the initiative, the focal commodities for value chain development would be cashew, cocoa, palm oil, sesame seed and shea.

“The commodities are to be funded under the approved guidelines of AGSMEIS (Agricultural/Small and Medium Enterprises Investment Scheme), NESF (Non-Oil Export Stimulation Facility) and RSSF-DCRR (Real Sector Support Facility-Differentiated Cash Reserves Requirement) in line with the approved limits in the Export Facilitation Initiative Funding Framework (EFIFF).

“The detailed operational requirements for the initiative will be released in due course.”

Who is eligible for funding?

Under the EFIFF, small holder farmers operating in clusters along with medium and large sized companies are eligible to apply.

Types of funding

For the large and mid-sized players, funding will be made available for land acquisition and cultivation (facility A). Funding will also be made available for milling and refining capacity (facility B).

For the small holder farmers, funding will be made available under the clusters via aggregation.

Funding terms: Tenor and interest rate

For cocoa and oil palm producers, facility A and B will last for 7-10 years and 5-7 years respectively. Tenor for small holder farmers’ funding will also last for 5-7 years.

For cashew producers, the tenor for all facilities is one year with a 120-day clean up cycle, where the beneficiary completely pays out the loan within the pre-defined period.

Tenor for all shea producers eligible for the funding is one year with the option of rollover, while for sesame seed producers, a one-year warehousing period along with four-4 year asset acquisition is stipulated.

The interest rate on all credit facilities for the five commodities is set at 9% in line with CBN’s single digit interest rate mandate.

Funding terms: Moratorium/equity contribution

Cocoa and oil palm producers will have the same moratorium for the three credit facilities.

A 3-year moratorium on principal without equity is stipulated for facility A, while facility B will have a one-year moratorium on principal with 10-20% equity.

The moratorium for small holder farmers of cocoa and oil palm is 2 years on principal without equity.

Sesame seed producers will have a one-year moratorium on principal on asset acquisition and nil equity for facility A. Facility B will have a one year moratorium on principal on asset acquisition and nil equity with  10-20% equity.

Small holder sesame seed farmers will have a one-year moratorium on principal on asset acquisition.

For cashew growers, a 120-day clean up cycle is stipulated for the three facilities , with a 10 – 20% equity on facility B and nil equity for small holder farmers.

Producers of Shea have a moratorium period of  one year, with option of rollover for facility A, one year with option of rollover  and 10-20% equity for facility B, while small holder farmers have a one year moratorium with option of rollover and nil equity.