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200 billion agric loan: Projects must be insured

Agriculture News

Image result for agric loan nigeria: www.medianet.info

THE Central Bank of Nigeria (CBN) has ordered beneficiaries of the N200 billion Commercial Agricultural Credit Scheme (CACS) to henceforth obtain insurance cover for their projects from the Nigeria Agricultural Insurance Company (NAIC).

The order followed the release of the amended guidelines for the CACS in a circular signed by the Director, Financial Policy and Regulation Department, CBN, Mr. Kelvin Amugo. Entitled: “Amendment to the CACS Guidelines”, the circular stated: “The CBN has reviewed the guidelines for CACS, to enhance its effectiveness and further mitigate the risks faced by participating financial institutions in financing the agricultural sector.

This revision affects sections 16 and 17 of the guidelines and introduces significant changes, including a requirement that henceforth, NAIC should provide insurance cover for all agricultural facilities/projects under CACS in line with NAIC Act”.

While section 16(vi) incorporates NAIC as one of the key stakeholders in the scheme, Section 17e (f) of the amended guidelines states that: “A farmer whose crop or livestock is covered by Section 7 of this guidelines may take out an insurance cover under the scheme, but where the farmer is also a beneficiary of an agriculture loan or credit facility from the government, a bank or other financial institution (in this guidelines referred to as “lending institution”), he shall take out an insurance cover under the scheme (sub-Section 13 of NAIC Act).”

The Central Bank of Nigeria head office in Abuja. Furthermore, Section 17f spells out the responsibilities of NAIC under the scheme. It states, “NAIC’s responsibilities shall include: Provision of insurance cover for all the agricultural projects in the event of losses arising from the various hazards insured in the value chain;  Ensure that the subsidized portion of the premium in the production policies is collected from both the Federal and State Governments and; Provide the pre-determined premium rate from time to time to the lending bank.”

Other responsibilities are: “Prompt settlement of claims in an efficient and effective manner; Issue and incorporate the financial interest of the lending bank as the first loss payee into the policy document to the extent of their right and interests;  Provision of advisory and other risk management services;   Inspection and monitoring of farms and projects; The provision of training for the agricultural desk officers of banks on the Agricultural Insurance needs of CACS loan beneficiaries; and Provision of extension services and other ancillary services that may arise from time to time.”

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