The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) of the Central Bank of Nigeria and the Development Bank of Nigeria (DBN) has entered into a partnership that will see more funds channeled into the agricultural value chain (AVC) in the country.
Both NIRSAL and DBN signed a memorandum of understanding that will see the organisations leveraging on their strengths and technical skills to increase the flow of credit into financing micro small and medium enterprises in fixed AVCs.
NIRSAL is engaged in the business of providing risk management tools to enhance the flow of finance and investments into fixed AVCs and their related actors and segments.
The DBN which was established in 2014 by the federal government in collaboration with the World Bank, African Development Bank (AfDB), was created to address the major financing challenges facing MSMEs in Nigeria.
Speaking at the MOU signing, the managing director and chief executive of NIRSAL, Aliyu Abdulhameed, said the partnership of the institutions is significant to the transformation of Agriculture as a business in the country.
Noting that his organisation believes strategic collaborations with major stakeholders in the industry is pivotal to achieving defined and well-tailored objectives and results, he said “NIRSAL and DBN share a common goal of supporting investments that will catalyse sustainable economic growth, create more jobs and equip farmers with the capital needed to thrive in the Agricultural sector.
“It is a partnership that will leverage on the mandates and strengths of both Institutions to ensure that every Agricultural Value Chain (AVC) actor is better off and has the required technical skills to achieve potential productivity.”
Abdulhameed explained that NIRSAL will access funding provided by DBN for on-lending through NIRSAL selected and DBN approved Channel Partner Banks, adding that the credit facilities covered under the Partnership will be for NIRSAL approved Agricultural projects.
On his part, managing director of DBN, Mr. Tony Okpanachi, noted that while MSMEs have been the major driver of economic growth and transformation across the globe, their operations in Nigeria have however, been blighted by lack of access to long term finance, deplorable infrastructural facilities, high collateral requirements etc.
“MSMEs, if well managed have the potential to achieve key macro-economic objectives which include but are not limited to job creation, poverty alleviation, Financial inclusion, development of local technology and so on, which Nigeria critically needs to ensure balanced economic growth throughout the country.
“Our partnership with NIRSAL is aimed at reinvigorating the MSMEs that are playing in the agricultural sector through a partnership that combines risk-sharing by NIRSAL while DBN undertakes to provide the funds. The joint provision of NIRSALs risk mitigating credit guarantees and DBN’s long tenor credit facilities would make a landmark impact in stimulating growth in the Agricultural sector for MSMEs in Nigeria.”