The increase in agric sector credit was linked to the N200 billion
agriculture credit scheme and the N600 billion NIRSAL interventions.
The NIRSAL guarantees up to 75 per cent of bank loans to the sector. The NIRSAL initiative, which was conceived by the CBN, the Bankers’ Committee and the Federal Ministry of Agriculture and Rural Development (FMARD), seeks to create incentives and catalyse processes to encourage the growth of formal credit, direct and indirect, for the agriculture value chain, as a mechanism for driving wealth creation among value chain participants.
According to the central bank, NIRSAL is also expected to be a catalyst
for innovative risk management strategies, long-term financing for
agribusiness and significant job creation by new entrepreneurs.
“The mandate of NIRSAL is to act as the custodian of all credit
guarantee schemes, interest draw back schemes, and commercialisation
initiatives related to an integrated value chain approach to agriculture
and agribusiness in Nigeria,'' the CBN said. Under NIRSAL, there are
five pillars to be addressed by an estimated $500 million that will be
invested by the CBN,” the programme document explained.
There is also a risk-sharing facility of $300 million, planned to
address banks’ perception of high-risks in the sector by sharing losses
on agricultural loans. There is equally an insurance facility of $30
million intended to expand insurance products for agricultural lending
from the current coverage to new products, such as weather index
insurance, new variants of pest and disease insurance. Besides, there is
also a technical assistance facility amounting to $60 million, meant to
equip banks to lend sustainably to agriculture, producers to borrow and
use loans more effectively and increase output of better quality
agricultural products, among others.
source
