James Emejo
The Managing Director/Chief Executive, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Plc, Mr. Aliyu Abdulhameed, has said that NIRSAL has facilitated over N73 billion into the country’s agro-processing industry from deposit money banks, development financiers, private equity investors and other financial institutions.
He said the support was in line with its mandate on creating a stronger linkage between segments of Nigeria’s Agricultural Value Chain (AVC) and their subsequent linkage to commercial bank finance.
The funding, he added, came at a critical stage when developing economies are increasingly shifting from raw material production to both production and value addition for increased economic activity, foreign exchange earnings and widespread social development.
Also, he said the agency has effectively discharged its mandate to de-risk agriculture adding that the sum of N148 billion had so far been facilitated into different sectors of the agricultural value chain since its inception.
Speaking during an interactive session with journalists in Abuja, he said the quantum of financing so far attracted to agriculture remained an unprecedented milestone and achievement for the institutions, noting that ordinarily, such a feat would take decades to accomplish.
He said the financing opportunities created by NIRSAL in the sector have had significant economic impact in terms of employment generation among others.
He said, “What we mean is that we have brokered deals whose value added to that amount. Anywhere you inject private money of up to N148 billion, you will understand that it creates multiplier effects in terms of additional employment and economic activities which could result into trillions of Naira of economic activities.”
Specifically, he said NIRSAL’s finance facilitation efforts had generated an additional $2.5 billion worth of economic activity through agricultural products/outputs and other value chain economic activities, creating 360,000 direct jobs and positively impacting the lives of 1.8 million Nigerians.
He said, “As a result of the success of NIRSAL Plc’s risk-sharing model, commercial banks have pledged a combined $500 million to fund agriculture and agribusiness. Furthermore, NIRSAL Plc has been approached by other African countries to provide support for the establishment and implementation of Risk Sharing facility models in their respective jurisdictions.”
Abdulhameed also corrected an erroneous impression in some sections likening NIRSAL to commercial banks, which receive deposits and disburse credit.
According to him, NIRSAL remained a deliberate creation of the Central Bank of Nigeria (CBN) mainly to establish linkages between agriculture and financing, “as well as creates those conditions that influence change of the perception by banks that agriculture was highly risky to access funding.”
NIRSAL, he stressed, is saddled with the responsibility of galvanizing organic economic interest in the agriculture sector, to build conditions that enable borrowers and lenders engage in the creation of new value across the sector.
He attributed the success so far recorded on the effective deployment of its Credit Risk Guarantee (CRG) instrument used to share agribusiness-related credit risks with commercial banks and financiers by up to 75 per cent depending on the segment that CRG applicants operate in.
He said, “Because we measure our milestones in terms of volumes of finance facilitated, which runs into billions of naira, some people get the impression that we are lenders.
“When we say that NIRSAL Plc has facilitated the flow of over N146 billion into agricultural commodity value chains from commercial banks, we mean that we have brokered deals whose value add up to that figure.”
He said, “Banks, very conservative with depositors’ funds, have long shied away from lending to agriculture because of their high perception of risks. Therefore, NIRSAL Plc necessarily creates conditions that influence a change in perception under a purely commercial logic. We refer to it as fixing value chains.”
Add Comment