By Omotayo Edubi
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc) has disclosed that banks in Nigeria have agreed to a combined US$500 million to fund agriculture and agribusiness.
NIRSAL Plc made the disclosure on Friday at a media parley in Abuja.
According to NIRSAL Plc, “as a result of the success of NIRSAL Plc’s risk-sharing model, commercial banks have pledged a combined US$500 million to fund agriculture and agribusiness.”
The agency noted that its “finance facilitation efforts have generated an additional US$2.5 billion worth of economic activity through agricultural products/outputs and other value chain economic activities, created 360,000 direct jobs and positively impacted the lives of 1.8 million Nigerians”.
Furthermore, NIRSAL Plc revealed that it “has been approached by other African countries to provide support for the establishment and implementation of Risk Sharing facility models in their respective jurisdictions”.
Managing Director/CEO of NIRSAL Plc Mr. Aliyu Abdulhameed, stated that “as a guarantor, NIRSAL Plc’s support positively impacts financiers, borrowers and the nation’s economy.
“While financiers are now able to confidently invest in profitable agribusiness ventures, agribusinesses who borrow from them can improve productivity and profitability, all of which generate much-needed local economic activity” Abdulhameed said.
He added that “the injection of finance into the Agric sector through NIRSAL Plc has resulted in broad socio-economic growth”.
According to him Agribusinesses “have been able to expand their operations and increase their staff strength, with NIRSAL Credit Risk Guarantee (CRG) beneficiaries attesting to a 20-60 percent increase in capacity utilization, productivity, number of markets served and sales value”.
To provide further support to Nigeria’s farmers and agribusinesses, NIRSAL Plc said it has, “through its Interest Drawback (IDB) scheme, “rewarded diligent borrower behaviour through discretionary rebates of up to 40 percent of interest paid on NIRSAL CRG-backed agribusiness loans”.
“To date, NIRSAL Plc has paid out over ₦1.64 billion, thereby reducing the effective interest rate for borrowers with a good credit history” the NIRSAL Plc boss said.
Also critical in the creation of NIRSAL CRG-backed loans is NIRSAL Plc’s constant engagements with commercial banks and training of their officers.
To date, over 4,250 bank officers have been trained on NIRSAL CRG guidelines and efficient Agric lending, resulting in a better understanding of the two, an improvement of banks’ disposition towards Agric lending and an increase in bank lending.
At the point of NIRSAL Plc’s establishment, bank lending to Agriculture stood at 1.4 percent. Since then, the NIRSAL CRG has contributed to this figure jumping to 5.4 percent as of Q3 2021.
The NIRSAL CRG is NIRSAL Plc’s core product used to share agribusiness-related credit risks with commercial banks and financiers by up to 75 percent depending on the segment that CRG applicants operate in.
“The riskier the farmer group or agribusiness operations, the higher the percentage of risk NIRSAL Plc shares” Abdulhameed said.
