The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) is advocating for a single digit break-even interest rate to borrowers in the agricultural and agribusiness sector of the economy, as ways of increasing funding to the sector to improve agribusiness value chain.
The Nigerian agribusiness risk manager want the current lending rate of 14 percent reduced to between seven to ten percent interest rate, while NIRSAL will de-risk the loans granted to the sector by guaranteeing bankable projects.
Aliyu Abdulhameed, MD/CEO, NIRSAL Plc, Guest Speaker at the Institute of Directors (IoD) Nigeria, April 2018 Members’ Evening held recently in Lagos said NIRSAL has guaranteed 454 projects in the agricultural value chain worth N61.16bn since inception in 2013.
According to Abdulhameed, NIRSAL is a $500 million Public Private Corporation by the Central Bank of Nigeria (CBN) designed to define, price and share agribusiness related credit risk. It is an initiative of the CBN, the Bankers Committee and the Federal Ministry of Agriculture and Rural Development.
Abdulhameed stated that NIRSAL has been able to mobilise financing for Nigerian agribusiness by using credit guarantees to address the risk of default, which is a flexible financing tool designed to change the behaviour of financial institutions towards agribusiness.
“Our mandate is to enhance the flow of affordable financing to all players along the entire Agricultural Value Chains, fix broken Agricultural Value Chains and build the capacity of banks and value chain actors. NIRSAL facility covers all crops and livestock activity in Nigeria while driving improved investment outcomes and job creation,” said Abdulhameed.
Ahmed Rufai Mohammed, President/Chairman of Council, IoD Nigeria, said the institute provides platforms that promote the entrenchment of business ethics and policies that encourage business growth and development.
According to him, Members’ Evening is one of such platforms of the IoD in providing opportunities for its members to make meaningful inputs and suggest policy options that could enhance government decision making process on issues bordering on provision of an enabling environment for businesses across sectors.
Mohammed opined that despite the high income from oil export, agriculture remains the largest sector in the Nigerian economy, accounting for 22 percent of the GDP and about 70 percent of employment opportunities.
“The picture is a microcosm of the African economy where the agriculture sector accounts for up to 60% of all jobs and contributes well over 50% of many of the nations’ GDP. It is, therefore, not surprising that the agriculture sector across Africa is receiving tremendous attention in recent times. The situation is not different in Nigeria more so with the increased drive by the present administration to diversify the economy,” he stated.