NIRSAL guarantees over N61bn loans to agriculture
The Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) has so far guarantees loans totaling N61.160 billion to agriculture and paid out N753.35 million rebate to borrowers who paid back their loans on time.
NIRSAL has equally guaranteed up to 207 agricultural value chain projects valued at N39.49 billion under the Growth Enhancement Scheme (GES) program of the Federal Ministry of Agriculture and also paid Interest Draw Back to beneficiaries on 91 Projects valued at $2.2 Million (N439.09.82 Million).
NIRSAL was set up in 2013 as an initiative of the Central Bank of Nigeria (CBN), the Banker’s Committee and the Federal Ministry of Agriculture as a primary platform for managing agribusiness risk so banks can lend with confidence to the agriculture sector.
NIRSAL is able to do this by using credit guarantees to address the risk of default and providing technical assistance and incentives to both financial institutions and borrowers to bridge understanding and increase capacity to payback. It also provides insurance coverage for agric loans, a bank rating system and incentives that encourage banks to lend to the agriculture sector.
Speaking on the achievements recorded so far, Aliyu Hameed, NIRSAL Managing Director called it “a game Changer in Nigeria’s agricultural space which will have a huge positive impact not only on the agric sector but also on the entire economy if the projections are met.”
NIRSAL plans to facilitate lending to 3.8 million agricultural producers out of the estimated 14 million agricultural producers in Nigeria in the next ten years by providing guarantees through intermediaries like Micro finance banks and cooperatives.
Hameed spoke at the Design Workshop on Establishing an African Agriculture Risk Sharing and Financing Mechanism organized by the African Development bank (AfDB) last week in Nairobi, Kenya.
The event was organized by the African Development Bank (AfDB) as part of its plan to partner with African governments and financial institutions to design an innovative mechanism which will facilitate increase in financing to the agriculture sector, by de-risking agriculture value chains, reducing transaction costs and unlocking financial flows into the agriculture sector at scale across the continent.
In its post event assessment of the workshop, the AfDB identified the NIRSAL financial model as one of the current successes of African agriculture.
In his presentation, Hameed also stated that another key objective of NIRSAL is to increase total value of agricultural lending – from the current 1.4% towards 10% of total bank lending by 2026, generating by USD 3 billion of additional agricultural lending in order to boost food production levels, stimulate inclusive growth, create jobs and increase the standard of living of farmers who constitute the greater majority of our population.
He emphasised that unlike oil and gas, the growth of agriculture in Nigeria will not lead only to prosperity but also improvement in income equality in the country.
Hameed asserted that the positive impact of agriculture on income inequality is one of the many reasons for the focus of the Buhari administration on the sector which has the potential to boost the economy and improve the lives of Nigerians.
He, however described the progress made so far by NIRSAL as a product of the farsighted pro-people vision of the Buhari administration and the continued commitment of the Godwin Emefiele led Central Bank of Nigeria to achieving the vision.
Relatedly, Hameed said that NIRSAL has between 2013 and mid 2016 trained 157,000 farmers/primary producers in 6 value chains: Rice, Cocoa, Cotton, Tomato, Sesame and Soybeans.
The event was attended by Ministers of Finance and Agriculture, Central Bank Governors, financial institutions, insurance companies, sovereign wealth funds, pension funds, agribusiness companies, youth groups, civil society organizations, among others, according to a mailed statement by Bello Abdullahi Abba, Coordinator Research & Strategy, NIRSAL