Commodity Development Initiative: Oil Palm

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Overview

The Oil Palm Development Initiative was introduced in 2019 with the aim of closing the existing palm oil supply gap of 1.25 million MT annually. It also seeks to develop the oil palm value chain, increase productivity, create jobs, and diversify the economy. The initiative is being funded from extant interventions of the Bank, provided the financing request and project meet the requirements stipulated in the relevant guideline. Funds are being channeled to the industry to strengthen the capacity of farmers and oil palm companies to increase production.

Objective of the Initiative

• To meet local demand of palm oil and improve local processing quality standard;
• To develop 350,000 Ha of oil palm plantation by 2025;
• To create jobs and enhance the skills of Nigerians along the oil palm value chain;
• To facilitate easy access to funding for oil majors, SMEs and smallholder farmers.

FAQs

Why is CBN involved in the financing of oil palm value chain in Nigeria

The Bank is intervening in financing commodities that are critical to economic development. Oil palm is one of the focal commodities with enormous potentials to create jobs, diversify the economy and conserve foreign reserve.

Who are oil palm majors?

Oil palm majors are big players in the industry cultivating and processing large quantities of oil palm (usually 5,000 ha and above).

What is out-grower scheme?

The out-grower scheme is designed to link smallholder farmers with oil majors. Farmers under the scheme can benefit or access technical and financial support from the majors.

What is the maximum obligor limit that can be accessed under the initiative?

The initiative is funded through existing interventions. The loan limits are prescribed in the guidelines of the interventions.

What is the loan tenor?

The tenor for term loan is maximum of 10 years. For plantation maintenance, it is 12 - 18 months with an option for extension.

What is the moratorium for the loan?

The moratorium is maximum of three years (3) from the date of disbursement and is applicable on principal only.

What are the collateral requirements for loan?

The collateral requirement is negotiated and agreed between the Participating Financial Institution (PFI) and the intending borrower.

What is the interest rate?

The maximum interest rate is five (5) percent, to revert to 9% by March 1, 2022.

Can individuals or groups participate more than once?

Yes, provided the loan accessed is fully repaid and the borrower is no longer encumbered by any loan.

How do I participate in the Scheme?

Individuals, organizations or groups are expected to approach any PFI of their choice to initiate the application process. If the PFI is satisfied with the project, the PFI can apply to Central Bank of Nigeria on behalf of the project promoter.

Can State Governments participate under the Scheme?

Yes, State Governments are eligible to participate, subject to meeting all the requirements for accessing intervention funds.