CBN approves N75 Billion Loan to Farmers under NIRSAL

The Central Bank of Nigeria (CBN) has approved the disbursement of about N75 billion as loan to farmers in the 36 states and the Federal Capital Territory (FCT) under the Nigerian Incentive-Based Risk Sharing in Agricultural Lending (NIRSAL).

The loan guarantee scheme is a public-private sector initiative set up to transform the country’s agricultural sector.

The scheme was instigated by the Apex Bank, the Bankers’ Committee and the Federal Ministry of Agriculture and Rural Development, to guarantee 75 per cent loans provided by Deposit Money Banks (DPB) to farmers.

Speaking on the role of NIRSAL, The Head of the Project Implementation Office under the Development Finance Department of the CBN, Jude Uzonwanne, expressed that the guarantee would be issued to farmers through commercial banks and other financial institutions.

“NIRSAL is a flexible financing tool designed to change the behaviour of financial institutions. It covers all crops and livestock activities in Nigeria, while driving improved investment outcomes and job creation.

It is also building on a legacy of previous CBN interventions in agriculture that has helped create thousands of jobs,”  he stated.

Uzonwanne furthered that the programme was designed to create access to finance to farmers by integrating end-to-end agriculture value chains, such as input producers, farmers, agro dealers, agro processors and industrial manufacturers with agricultural financing value chains – loan product development, credit distribution, loan origination, managing and pricing for risk, and loan disbursement

“The integration is driven by NIRSAL’s 5 pillars, particularly the Risk Sharing Pillar and the Technical Assistance pillars, such as Risk sharing Facility, allocated N45 billion, Insurance Facility (N4.5 billion), Technical assistance facility (N9 billion), Agricultural bank rating scheme (N1.5 billion), and Bank incentive mechanism (N15 billion)”, he esplained.

Uzonwanne also added that NIRSAL would mobilize financing for Nigerian agribusiness using credit guarantees to address the risk of default.

Meanwhile, the Director of Treasury in the FCT Administration, Ibrahim Bomai, emphasized the role  NIRSAL as  being instrumental to the success of the Federal Government’s Agricultural Transformational Agenda) as it was established to address the grey areas inhibiting agricultural growth in the country.

According to Bomai “NIRSAL seeks to address all the technical, administrative and financial needs of the farmers along the selected agricultural value chain commodities in which the country has comparative advantage”.