The Trouble With CBN’s AGSMEIS Loan for Agri-Businesses and What Prospective Applicants Should Know
When the FG, through the CBN, launched the Agri-Business Small Medium Enterprises Investment Scheme (AGSMEIS) back in February 2017, it was welcomed by many Nigerians.
This was because it was designed to provide the all-important financial resource many businesses crave for and doing so in the very essential sector of small-scale agriculture.
The loan which is administered by the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), has the all-important benefit of not requiring collateral as a requirement for accessing the funds. It also attracts a very low-interest rate of 9% per annum. In contrast, the official lending rate in the country is about 12.5%.
But more than 3 years later, while the loan scheme is still very much alive, its administrators probably aren’t prepared for the huge engagement the scheme attracted from the very people it was designed for in the first place.
Huge financial sacrifices
The major outcry was occasioned by the stiff financial sacrifice applicants had to make to qualify for the fund. One of them, perhaps the most important, is a compulsory training from a CBN certified Entrepreneurship Development Institute (EDI).
It is unclear exactly why the CBN made this training a compulsory requirement. However, NIRSAL noted that the EDI’s would help the applicants develop a business plan before seeing them through the application process.
EDI’s are also expected to help applicants implement their business plans after the loan has been awarded as well as provide business support services going forward.
Applicants claimed to have paid as much as N120,000 for the training and subsequent accreditation.
This considerable financial involvement has made many applicants consider the AGSMEIS fund little lesser than a loan and a little more like them making an actual investment whose return is the money they intend to get.
This in itself is a huge problem. It also makes getting an award letter from NIRSAL has become not just physically exerting but also financially draining.
A Kano-based applicant, Ngozy Daniels who spoke with TechNext said there are too many manipulations and intentional delay of award letters by the NIRSAL office in Kano, especially against non-northerners. He blamed this on politicians who seem to have hijacked the process for their cronies.
“People have to pay between N200,000 to N350,000 just to get award letters,” Daniels said. “To be fair, very few people got theirs naturally while most had to pay through their noses just to be awarded an amount.”
But paying through their noses doesn’t end with getting award letters as successful applicants also have to pay to access the funds. Daniels claims that NIRSAL agents and officials make it difficult to access the funds unless they get their cuts from the beneficiaries.
Lack of feedback
Another cause of frustration for applicants is the lack of communication and feedback. Many applicants claimed that since completing their application, they are yet to get feedback from NIRSAL as regards the success or otherwise of their applications.
According to the NIRSAL, the entire process from application to approval takes between 6 to 8 weeks after which approvals or rejections would be communicated to the applicants. However, Stephane Iwu said it’s been more than 16 weeks yet no disbursement and no rejection.
“I got interviewed on 23rd June 2020. Since then nothing has been done yet they keep on interviewing other people without disbursement of funds,” he said. Another person claimed to have applied since February but is yet to get a feedback.
This has caused many applicants to be frustrated and dissatisfied with the entire process. After spending between N60,000 to N120,000 for training, accreditation and interview, understandably, the least they deserve is prompt feedback.
That hasn’t happened for many and they aren’t happy about it.
What prospective AGSMEIS applicants should know
The Agri-Business Small and Medium Enterprise Investment Scheme (AGSMEIS) is targeted solely at small and medium scale agro-businesses. Its aim is to boost small and medium scale agricultural businesses across the country and consequently, boost food production.
The loan is not for artisans or traders or financial services businesses etc. It is strictly for agri-businesses and businesses that don’t fall under this category aren’t supposed to apply.
As of September 2020, the total fund earmarked for this investment is N66.18 billion. The 66.18 billion has been distributed among the 6 geopolitical zones in the following manner:
The Northcentral got the largest share of N18.29 billion. This is quite understandable because the northcentral has the most arable lands in Nigeria and are thus expected to be more agro-focused.
The South-south has the next largest share with N13.93 billion. The southwest is next with N12.52 billion. The northwest’s N9.12 billion makes it the region with the fourth-largest share. The Northeast has N6.86 billion while the Southeast has the least share with N5.44 billion.
Of the 66.18 billion budgeted for the AGSMEIS loan, N54.66bn has been made available by the CBN.
Limited number of beneficiaries
Most applicants seem to be under the impression that once they complete their training and get interviewed, they automatically become entitled to the funds. But this is not so.
As at October 2020, the number of beneficiaries targeted by the fund is only 14,638.
This means only as many businesses (or individuals) would eventually access the loan. In a nutshell, paying for the EDC training and getting accredited doesn’t mean you have qualified for, and must receive the loan. It more or less only qualifies an applicant for consideration for an interview. After the interview, NIRSAL has the power to approve or reject a proposal.
In conclusion, the NIRSAL is supposed to communicate a decision to every applicant within 8 weeks tops. But according to most applicants, that hasn’t been the case.
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