NIRSAL Facilitates N102bn Loans, Creates 400,000 Jobs
The Managing Director/Chief Executive Officer of Nigerian Incentive-Based Risk Sharing System for Agricultural Lending, (NIRSAL), Mr. Aliyu Abdulhameed, on Thursday said the company has facilitated over N102 billion as loans from commercial banks for the various Agricultural Value Chains in Nigeria.
He said over 400,000 jobs have been created and two million lives positively impacted in the pre-upstream, upstream, midstream and downstream segments of the agricultural value chain
He said NIRSAL Plc, a wholly-owned corporation of the Central Bank of Nigeria (CBN), is a $500million Non-Bank Financial Institution was specifically designed to Redefine, Measure, Re-Price and Share agribusiness-related credit risk.
He said although the company is not a lending institution, it was created to stimulate the flow of affordable finance and investments into fixed agricultural value chains.
He said NIRSAL has paid out a total of N4.6billion as claims to providers of finance (Deposit Money Banks) on Credit Risk Guarantees that crystallised.
He said an additional N1.2billion has been paid to prudent borrowers as Interest drawbacks who have found their cost of funds and businesses boosted as a result.
Abdulhameed, who made the disclosures at a briefing in Abuja on the activities of the company, said NIRSAL has signed an agreement with PETKUS Technologies GMBH on new technologies for seed and grain processing in Nigeria.
He said: “The mentioned activities and more speak to a N102billion total being financing facilitated from lenders for agribusiness since NIRSAL’s inception to Q4 2019. For clarity, the total amount leveraged by NIRSAL Credit Risk Guarantees and other Agricultural Risk Management Tools & Products is further broken down into the following Agricultural Value Chain activities: Agricultural Input(N6.7billion); mechanisation (N1.7billion); Primary Production (N18.6billion); Processing (N34.4 billion); Logistics (N580million); Growth Enhancement Scheme (N39.4billion); and Rural Financial Institution (N940million).
“It is important to state that through NIRSAL’s facilitation, over 400,000 jobs have been created and two million lives positively impacted in the pre-upstream, upstream, midstream and downstream segments of the agricultural value chain, specifically in the areas of mechanisation, input supply, primary production and processing.”
Abdulhameed spoke on what NIRSAL is doing on insurance for agriculture, especially primary producers.
He said: “Insurance is a critical measure deployed by NIRSAL in managing and mitigating risk. It is an essential component of NIRSAL’s five pillars.
This Insurance facility is designed to expand agricultural insurance products to reduce credit risk and increase lending across the agricultural value chain.
“As at December 2019, a total of 35,160 farmers cultivating 36,347 hectares have used the NIRSAL Area Yield Insurance Index product to protect a total harvest value of over N4.77billion.
Insured farmers who suffered low area yields during the 2019 Wet Season have received appropriate compensation.
“In this regard, NIRSAL is leading a consortium of Agricultural Insurance underwriters to strategically transition their product focus from indemnity-based insurance to Area Yield Index, Revenue Index, Hybrid Index and finally to the NIRSAL Comprehensive Index Insurance product.
This suite of innovative products does not only provide compensation to farmers based on the cost incurred but also covers projected earnings.
“NIRSAL’s goal is to expand insurance uptake by primary producers from 0.5 million to 3.8 million by 2026 and continually develop insurance products that will give financial institutions and Agricultural Value Chain players the comfort they need to lend to the agricultural sector while building the capacities of underwriters.
“Prior to NIRSAL’s intervention, Agricultural insurance in Nigeria was indemnity based which only provided compensation equivalent to farmer’s cost of production. The uptake of this insurance product was very low.
“Working with its technical partner, NIRSAL collaborated with NAICOM and NAIC (who led a consortium of four underwriters) to provide innovative and index-based insurance to protect investments in the upstream segment of the agricultural value chain, particularly those of smallholder farmers.
Following the experience of the developed product, NIRSAL is in the final stages of developing the proprietary NIRSAL Comprehensive Index Insurance (NCII) product.
“In a bid to further de-risk Nigeria’s agriculture industry for investors and financiers, NIRSAL as the Agricultural Finance Risk Management Corporation of the Central Bank of Nigeria has dimensioned the entire Agricultural value chain into four segments: The Pre-upstream, Upstream, Midstream and Downstream.
“NIRSAL develops and deploys appropriate de-risking strategies that speak to the entire risk universe as they affect both the agricultural and agriculture finance value chains.”