NAIC to make insurance cover available, as CBN amends CAC guidelines

The Central Bank of Nigeria (CBN) with the aim of promoting commercial agricultural enterprises in Nigeria has amended the guidelines for Commercial Agriculture Credit Scheme (CACS).

The Nigerian Agricultural Insurance Corporation (NAIC) under the reviewed guidelines which affect sections 16 and 17 of the document shall henceforth provide insurance cover for all the Agricultural projects in the event of losses arising from the various hazards insured in the value chain.

According to CBN, the NAIC shall also ensure that the subsidized portion of the premium in the production policies is collected from both the Federal and State Governments.

The guideline made available in the bank’s website defines a commercial enterprise as “any farm or agro-based enterprise with agricultural asset (excluding land) of not less than N100 million for an integrated farm with prospects of growing the assets to N250 million within the next three years and N50 million for non-integrated farms/agro-enterprise with prospects of growing the assets to N150 million, except in the case of on-lending to farmers’ cooperative societies.”

The CBN revealed all participating banks are required to sponsor projects from any of the target areas indicated in the Guidelines and bear all the credit risk of the loans they will be granting.

The single obligor for any project from a participating bank under the Scheme shall be N2.0 billion while it shall be N1.0 billion for State Governments. However, State Governments may be granted concessionary approval for more than N1.0 billion for special schemes and programmes for agricultural development.

“The borrower shall: Be a limited liability company with asset base of not less than N100 million and having the prospect to grow the net asset to N250 million in the next three years and complies with the provision of the Company and Allied Matters Act (1990; Have a clear business plan; Provide up-to-date record on the business operation if any; Have out growers programme, where appropriate; Satisfy all the requirements specified by its lending bank,” the document read in part.

Meanwhile, under the NAIC insurance cover Guidelines, participating Banks shall: Educate and enlighten the borrower to take NAIC insurance policies for the various items across the agricultural value chain; Obtain NAIC insurance covers as condition precedent to the draw down/disbursement of the loan; Calculate the premium due, in consultation with NAIC, in respect of the various insurances that would be effected on the projects of the borrower and deduct the premium from the approved loan on behalf of NAIC among others.

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