Agricultural Credit Guarantee Scheme Fund (ACGSF) – Federal Government Agricultural Loan Support
Program: Agricultural Credit Guarantee Scheme Fund (ACGSF)
Administrator: Central Bank of Nigeria
Sponsors: Federal Government of Nigeria and the Central Bank of Nigeria
Sector: Agriculture & Agribusiness Financing
Eligible Country: Nigeria
The Agricultural Credit Guarantee Scheme Fund (ACGSF) is a Federal Government-backed financing support program created to encourage banks and financial institutions to lend to farmers and agribusiness operators across Nigeria.
The scheme was established under Decree No. 20 of 1977 and became operational in April 1978. It is funded jointly by the Federal Government of Nigeria (60%) and the Central Bank of Nigeria (40%), with a share capital of ₦50 billion.
The primary goal of the scheme is to increase access to credit for agricultural production and value chain activities by reducing the risk that banks face when lending to farmers and agribusiness enterprises.
Under the program, the fund guarantees up to 75% of the loan amount in the event of default, encouraging banks to provide more financing to the agricultural sector.
Purpose of the Agricultural Credit Guarantee Scheme Fund
The ACGSF was created to strengthen Nigeria’s agricultural sector by making it easier for farmers and agribusiness operators to obtain financing.
Key objectives of the scheme include:
- Increasing the level of bank credit available to the agricultural sector
- Encouraging banks to support farmers and agribusiness entrepreneurs
- Reducing the risks associated with agricultural lending
- Promoting agricultural production and value chain development
- Supporting food security and agricultural industrialization in Nigeria
Loans covered under the scheme include advances, overdrafts, and other credit facilities provided by participating financial institutions.
Eligible Financial Institutions
Loans guaranteed under the scheme must be provided by approved financial institutions.
Eligible participating financial institutions include:
- Deposit Money Banks (Commercial Banks)
- Microfinance Banks regulated by the Central Bank of Nigeria
These institutions process the loan applications and submit guarantee requests to the Central Bank on behalf of applicants.
Eligible Beneficiaries
The program supports individuals and businesses operating within the agricultural sector.
Eligible participants include:
- Smallholder farmers across the agricultural value chain
- Medium-scale farmers
- Agricultural entrepreneurs
- Agro-processors
- Agribusiness companies
The scheme is designed to support both primary agricultural production and downstream value chain activities.
Agricultural Activities Covered Under the Scheme
Loans guaranteed by the ACGSF must be used strictly for agricultural purposes.
Eligible activities include:
- Crop cultivation and agricultural production
- Plantation establishment and management
- Livestock farming and animal husbandry
- Agricultural processing and value addition
- Agricultural storage and logistics
- Agricultural equipment and machinery acquisition
- Transportation and distribution within the agricultural value chain
The scheme supports any economic activity directly connected to agricultural production or agribusiness operations.
Loan Guarantee Coverage
One of the most important features of the scheme is its risk-sharing mechanism.
Under the ACGSF:
- The fund guarantees 75% of the outstanding loan amount in case of default.
- This reduces the financial risk faced by banks when lending to farmers.
- Banks still conduct their own credit evaluation and due diligence before approving loans.
The guarantee coverage duration depends on the gestation period of the agricultural activity or crop involved.
Collateral Requirements
Collateral requirements depend on the size of the loan.
- Non-collateralized loans: Up to ₦100,000
- Collateralized loans: Up to ₦50 million
Acceptable collateral may include:
- Land with legal farming rights
- Movable property
- Warehouse receipts
- Life insurance policies
- Stocks and shares
- Personal guarantees
- Assets registered under the National Collateral Registry (NCR)
- Any other acceptable security approved by the lending bank
Interest Drawback Programme (IDP)
The Interest Drawback Programme (IDP) is an additional support initiative under the ACGSF designed to reduce the cost of borrowing for farmers.
The program was introduced in January 2003 with a capital base of ₦2 billion, funded by the Federal Government (60%) and the Central Bank of Nigeria (40%).
Benefits of the Interest Drawback Programme
Farmers who repay their loans on schedule are eligible to receive:
- A 40% refund of the interest paid on their loans
This rebate helps reduce the overall cost of borrowing and encourages timely loan repayment.
Eligibility for Interest Drawback Claims
To qualify for the interest rebate:
- The borrower must repay both principal and interest within the agreed loan tenure.
- A grace period of up to three months may be allowed for repayment.
- Interest accrued during the grace period will not be eligible for reimbursement.
Claims are filed by the lending bank on behalf of the farmer.
How to Apply for ACGSF Financing
Farmers and agribusiness operators must apply through participating banks.
The process typically involves:
- Completing the ACGS application form provided by the bank.
- Submitting the required business and loan documentation.
- The lending bank conducting credit checks and due diligence.
- The bank forwarding the application to the Central Bank of Nigeria for guarantee approval.
- The Central Bank reviewing and issuing a guarantee certificate.
Applications must be submitted to the Central Bank within 30 days of receipt by the lending bank.
Additional Requirements
Before approval, the following processes are usually carried out:
- Credit Bureau checks
- Credit Risk Management System (CRMS) checks
- Site inspection of the agricultural project
- Mapping and tagging of agricultural enterprises
- Submission of inspection reports including photos and videos