CBN guarantees N61.2bn to 454 projects through NIRSAL

Central Bank of Nigeria (CBN) has through its subsidiary, the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL), guaranteed a total value of N61.2 billion to 454 projects given out by deposit money banks.

NIRSAL is a CBN initiative to de-risk agricultural lending, share the risk with deposit money banks and other stakeholders. NIRSAL has seed money of N75 billion distributed along its pillars including risks sharing, which has N45 billion components, technical assistance N15 billion components and insurance scheme, bank rating and bank incentive mechanisms.

“We have taken off on the other three but bank rating and bank incentive mechanism will come along the line. For now, we are at risks sharing, technical assistance and insurance scheme,” Edwin Nzelu, acting managing director of NIRSAL, said on Monday in Lagos at the Bankers’ Committee, sub-committee on economic development, sustainability, and gender financing agricultural value chain.

One of the pillars of NIRSAL is technical assistance, which is training and the essence of that training is to bring the farmers, bankers, credit risk officers together to understand one another and share in the mechanism around agricultural lending.

Ayo Akinola, senior technical advisor, GIZ Nigeria Limited, a German International Corporation, said “we have a technical partnership with NIRSAL to support farmers in the business school training and reaching out to farmers and bankers as well.”

He said the organisation had trained about 60,000 farmers in business school in Nigeria, mostly in the cocoa, tomatoes, and rice sectors. We work across 12 states and we have tight dedicated relationship with our-off takers.

Annemarie Matthess, head of Sustainable Smallholder Agribusiness Programme, acknowledged the gap to bridge between bankers and agricultural producers, adding that a myriad of challenges had continued to keep agricultural credit at an abysmally low level of roughly 4 percent to the total bank loan portfolio.

“In our naivety, our expectation was that bankers would jump at the opportunity of financing technically competent, entrepreneurial and business conscious farmers who could track their records, plan their businesses, understand the power of savings, aggregate quality produce for sales, but alas, we were dead wrong,” Matthess said.