The Agricultural Credit Guarantee Scheme Fund (ACGSF) is an ongoing initiative in the field of agricultural finance created through the Central Bank of Nigeria (CBN) to encourage financial institutions and banks to lend money to farmers and agribusinesses.
In 1977 The scheme was introduced in 1977. It helps reduce the risk that banks take in lending to farmers by guaranteeing a portion of the loan facility. This lets more farmers get affordable financing to increase production and enhance the security of their food supply.
This guide covers the ACGSF’s purpose, eligibility, coverage, application process, and required documents.
What is the Agricultural Credit Guarantee Scheme Fund (ACGSF)
ACGSF ACGSF is a loan guarantee scheme that is managed through the Central Bank of Nigeria (CBN). It doesn’t offer direct loans but instead guarantees the commercial banks that issue loans and microfinance institutions to people or businesses involved in agriculture.
Under this scheme, the federal Fund will guarantee up to 75 percent of a loan in the event of default, encouraging lenders to provide loans to agriculturalists who would otherwise be considered high-risk borrowers.
The ACGSF provides support for a variety of agricultural activities, including livestock production, crop production processing, fishing, storage, and marketing.
The information may vary depending on the program phase; please verify the details on the official CBN Agriculture Finance portal before applying.
Funding & Coverage for ACGSF
The Agricultural Credit Guarantee Scheme Fund is designed to make lending to farmers easier and safer.
Key details include:
- The type of support: Credit guarantee, not direct financing
- guarantee coverage: up to percent of the loan in default.
- Amount of Loan: Determined by the bank based on the scope of the project and cost estimations
- Inflation Rate The rate is based on the CBN’s prevailing rates for agricultural lending.
- Participating Institutions Participants include microfinance banks, commercial institutions, and other licensed financial institutions.
- Specific Sectors of Interest: Crop production, aquaculture, livestock, agro-processing storage, and logistical support for agriculture
- The purpose of HTML0 is to inspire banks to make more loans to the agricultural sector by decreasing the risk of exposure.
Eligibility for ACGSF
To be able to get credit from the Agricultural Credit Guarantee Scheme Fund, candidates must fulfill the following conditions:
- You must be a Nigerian citizen or a business company that operates within the country.
- Engage in agriculture-related production or value chain activities like processing, storage, marketing, or processing
- Be sure to have a viable and bankable business plan or a proposal outlining the proposed agricultural venture.
- Make an application via a participating microfinance or bank institution
- You must meet the bank’s standard for document and loan assessment requirements.
- The loan will be used only for the specified agriculture intention.
The ACGSF helps cooperatives, individuals, and registered agribusinesses.
How to Apply for ACGSF—Step-by-Step Guide
- Choose the participating bank as well as a microfinance institution
Visit a microfinance or commercial institution that is part of the ACGSF and request additional information on agricultural lending within the scheme. - Create a Business Plan or Formal Proposal
Clearly outline your agribusiness or farming operations, such as production cycles, as well as cost estimates and a repayment plan. - Fill out a loan request.
Fill out the form for loan applications from your bank, and make sure you mention your interest in obtaining financing through the ACGSF. - bank evaluation and guarantee request
A bank evaluates your application and sends an inquiry to the CBN to guarantee your loan within the framework of loan approval and payment processes. - loan approval and payment
After being approved, the loan will be released to you according to the agreed conditions. The CBN offers a guarantee to your bank. - Project Monitoring and Implementation
Utilize the credit only to fund the agriculture project. The bank will keep track of your progress through the entire production process. - The loan is due
Please ensure the repayment is made in accordance with the agreement. If there is a real default, ACGSF will reimburse up to 75 percent of the balance to the lender.
Required Documents
The applicants must write an application form and send the required documents:
- Valid methods to prove identity (National ID, voter’s card, National ID passport)
- Bank Verification Number (BVN)
- A feasibility or business plan
- Farm lease or ownership agreement
- Certificate of registration for business (for cooperatives or corporations)
- Bank account details
- Tax Identification Number (TIN) (for registered companies)
- Any permits or licenses pertinent to the particular sector of agriculture
Incomplete applications or missing documents could result in delays or disqualification.
Timelines
- Banking Application All year round, with participating banks
- Guarantee processing within 2-4 weeks after the loan’s approval
- Lending Tenure The loan term is based on type (short-, medium-, or long-term).
- Tracking and repayment are continuous throughout the project period.
- Claims Settlement (if relevant): After bank verification and CBN approval
The timing of claims settlement varies depending on the bank’s processing procedures and the cycles of livestock or crop production.
Common Challenges or Warnings
- The guarantee safeguards the lender but not the borrower. You are still obligated to repay the entire loan amount.
- Apply only through accredited financial institutions. Avoid middlemen and agents who are not official.
- Ensure that the approved agricultural activity aligns with the loan’s purpose.
- Keep accurate records and be in compliance with all control requirements.
- A default on repayment could affect the ability to access CBN or other government-backed financing.
FAQs on Agricultural Credit Guarantee Scheme Fund (ACGSF)
1. What exactly is ACGSF? The ACGSF is a federal guarantee that allows banks to loan to farmers by assuming a portion of the risks they face in the event of a loan’s default.
2. Who is responsible for the scheme? It’s run through the Central Bank of Nigeria on behalf of the ACGSF Board.
3. Does ACGSF offer the loans directly to farmers? It does not, but it offers bank guarantees, which are later lent to farmers.
4. What kind of agricultural activity is eligible? Crop production, livestock fishing storage, agro-processing, and marketing.
5. What percentage of the loan will ACGSF insure? ACGSF will assure 75 percent of the loan amount in the event of default.
6. What is the rate of interest? The interest rates are set by banks that participate, guided by CBN policies on lending to agriculture.
7. Does collateral need to be secured? Requirements are contingent on the amount of the loan and the bank’s policy. Smaller loans could be secured by group guarantees.
8. Do cooperatives have the right to apply? Are they eligible? Yes. Cooperatives as well as associations of farmers are encouraged to apply.
9. How long will it take to approve generally? 2-4 weeks, subject to bank verification as well as CBN processing.
10. Are there any individuals who can make an application directly with the CBN? However, all applications must be made via participating banks.
11. Does the guarantee come automatically? The guarantee is not automatically provided. The bank has to make a guarantee request and receive approval prior to making the transfer.
12. What is the consequence if the borrower fails to pay? What happens? CBN covers the guarantee (up to 75 percent) in cash to the lender, whereas the borrower is accountable for the balance.
Conclusion
The Agricultural Credit Guarantee Scheme Fund (ACGSF) is one of Nigeria’s most efficient instruments to encourage lending to farmers. By mitigating the risk for financial institutions, the Agricultural Credit Guarantee Scheme Fund (ACGSF) enables farmers and business owners to access affordable credit for business expansion.
To reap the benefits, farmers must create a strong business plan, contact an institution that is a participant, and make sure they are in compliance with the lending regulations.
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