The Commercial Agriculture Credit Scheme (CACS) is a major initiative in financing agricultural production in the Central Bank of Nigeria (CBN) to promote commercial agriculture and agribusiness growth. CACS was established during the year 2009 to improve the security of our food supply, create employment, and boost the value of agriculture in the GDP of Nigeria.
The scheme offers affordable loans at low rates of interest to large-scale farmers as well as agro-processing businesses to boost the productivity of agricultural products and increase value.
This guide explains what CACS is and its financing structure, who can qualify for it, how to apply, and what documents are needed.
What is the Commercial Agriculture Credit Scheme (CACS)
The Commercial Agriculture Credit Scheme (CACS) is a credit intervention program that is funded and operated by the Central Bank of Nigeria (CBN) in partnership with the participating financial institutions.
The goal of the program is:
- Facilitate access to financing for commercial farmers as well as agribusinesses.
- Reduce costs of financing for agriculture-related businesses.
- Assist in storage, processing, production, and distribution of commodities from agriculture.
- Facilitate self-sufficiency in food production as well as the industrial supply of raw materials.
- Help create employment and improve rural economies.
It is designed specifically for medium- to large-scale farmers, not small-scale farmers.
The information may differ based on the program’s phase. Verify information through official CBN agriculture finance updates.
Funding & Coverage of CACS
The CACS is funded by the issue of a special bond through the Federal Government and managed by the CBN.
The most important features of funding are
- loan size: Up to N2 billion for commercial businesses that are private and up to N1 billion for state government through banks that are participating.
- Interest Rate: Maximum of 9% per annum.
- The term of a loan: Maximum 12 months in working capital and up to 5 years or more for infrastructure and machinery investments.
- Payment Terms The structure is based on the flow of cash and the production cycle of the business of the borrower.
- Eligible sectors: Crop production, aquaculture, fisheries, livestock, agro-processing, input supply storage, logistics, and input supply.
- Beneficiaries Agribusinesses, cooperatives, commercial-scale farms, and agricultural investors.
The program aims to promote agricultural mechanization and value chain integration, with a focus on companies that can produce for both export and domestic markets.
Eligibility for CACS
To be eligible for the Commercial Agriculture Credit Scheme, applicants must meet the following conditions:
- You must be a registered business or an entity of the state government that is engaged in agricultural processing or agro-processing.
- Work on operating on an industrial or commercial scale and not as a small or micro farmer.
- You must have a credible business plan that shows that you are profitable and have the ability to pay.
- You should have a functioning bank account with a banking institution, whether it is a development or commercial bank.
- Offer adequate collateral or security in accordance with the requirements of the bank lending to you.
- Are able to carry out the agricultural project in a way that is effective.
Preference is accorded to companies that contribute to food security, diversification of exports, and the creation of jobs.
How to Apply for CACS—Step-by-Step Guide
- Visit the Participating Bank Contact any bank, development, or commercial finance institution that provides CACS.
- Create a detailed business plan
Detail your project’s scope, cost, and expected outputs, as well as a repayment plan. - Apply for a Loan
Apply via the bank that is participating, and attach all required documents and financial information. - Application for Bank Appraisal as well as CBN Submittal
The bank examines your application before it sends it to the CBN to be approved and backed by a guarantee. - loan approval and payment
After the loan is approved, the funds are transferred into your account in accordance with the approved project implementation timeframe. - Implementation and monitoring of projects
Utilize funds only for approved uses. Banks and CBN can conduct site inspections and audits. - Repayment
Pay the loan on time. Repayments that are consistent help ensure that you are eligible for future interventions.
Required Documents for CACS Application
Candidates should write the following information:
- Valid method of identification (National ID, Passport, or Driver’s License)
- Certificate of Incorporation (for companies)
- Memorandum and Articles of Association
- Resolution of the Board that authorizes the company to take out loans
- A comprehensive business strategy or feasibility analysis
- Evidence of capacity for operation or production previous experience
- Bank account information and BVN
- Lease or land ownership agreement (for the production of agricultural products)
- Security documents or collateral as required by banks
- Tax Identification Number (TIN) and corporate financial statements (if appropriate)
A complete document increases the probability of approval and also ensures prompt payment.
Timelines
- Application Window All year round, with participating banks
- Evaluation and Screening: 2-6 weeks depending on the extent of the project.
- Approval and disbursement: within a period of 1-2 months following the fulfillment of all requirements
- The loan duration is 12 months for working capital and up to 5 years or longer for fixed assets.
- Monitor: Throughout the loan time
Common Challenges or Warnings
- Not suitable for the small-scale farmer: The scheme targets industrial and commercial agricultural businesses.
- Beware of any consultants or agents who are not licensed and that claim to be approved by a guarantee; apply directly to your bank.
- Make sure that the documents verify that all documents are valid and authentic to avoid delays.
- The requirements for collateral can differ for different banks and ensure that they are able to meet the financial obligations.
- The inability to repay the loan or to make a mistake with funds can result in being ineligible to participate in subsequent CBN interventions.
FAQs on the Commercial Agriculture Credit Scheme (CACS)
1. What exactly is CACS? It’s a loan scheme managed by the CBN that provides low-interest loans to commercial agricultural businesses in Nigeria.
2. Who is eligible? Companies that are registered as well as state government entities that engage in commercial agriculture.
3. Are you referring to a grant or credit? CACS provides loans—not grants—with attractive rates of interest and repayment terms.
4. What is the rate of interest? A single-digit rate that is capped at 9%.
5. Do I require any collateral? The lending bank requires security or guarantees.
6. How much is the max amount of the loan? N2 billion to private businesses as well as N1 billion for state-owned entities.
7. What are the activities included? Production of crops and fisheries, livestock, agro-processing storage, and marketing of agricultural products.
8. Are new businesses eligible to apply to join the program? Yes, provided they’re registered legally and have demonstrated financial and operational capability.
9. How long will repayment take? Up to 12 months to repay working capital loans, and five years or more in the case of infrastructure or equipment.
10. Is the scheme available across Nigeria? It is available to commercially eligible agriculture enterprises across Nigeria.
Conclusion
The Commercial Agriculture Credit Scheme (CACS) provides a solid financial foundation for large-scale agricultural businesses in Nigeria. With its low-cost credit terms and flexible payment timeframes, as well as a wide range of services, it can help agricultural businesses scale their production, increase value, and boost exports.
To reap the benefits, create your business plan in detail and ensure that you meet all rules and regulations, then apply to your bank’s agriculture finance department.
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