NIRSAL Facilitates N146bn Agro-business Through Banks, Others
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) on Tuesday announced that it had facilitated the flow of over N146bn into Nigeria’s agro-processing industry to date from various sources.
It outlined the sources to include Deposit Money Banks, development financiers, private equity investment firms, and other financial institutions.
NIRSAL’s Managing Director, Aliyu Abdulhameed, told journalists at the press briefing in Abuja that the move was to create a stronger linkage between segments of Nigeria’s agricultural value chain and subsequent AVC-linkage to commercial bank finance.
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 N146bn into agricultural commodity value chains from commercial banks, we mean that we have brokered deals whose value add up to that figure.
“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 purely commercial logic. We refer to it as fixing value chains.”
Abdulhameed noted that when banks lend and the projects succeed, and the borrowers payback, then the job of NIRSAL had been done.
“We at NIRSAL Plc wake up every morning and go to work for the sole purpose of triggering and sustaining this flow,” he stated.
He explained that the deployment of the firm’s Credit Risk Guarantee instrument had helped in sharing agribusiness-related credit risks with commercial banks and financiers by up to 75 per cent depending on the segment that CRG applicants operated in.
Abdulhameed stated that the riskier the farmer group or agribusiness operations, the higher the percentage of risk NIRSAL Plc shared.
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He said, “By protecting financiers and investors from possible losses in a credit transaction, NIRSAL Plc has built up their confidence to lend to players in the agric sector, a sector once widely considered as a no-go area in finance circles.
“Backed by the NIRSAL CRG, farmer groups and agribusinesses which before the introduction of the CRG, had found it difficult to secure loan approvals from commercial banks, now enjoy smoother approval processes for the loans they require to expand their operations.”
He further noted that over 4,250 bank officers had been trained on NIRSAL CRG guidelines and efficient agric lending, resulting in a better understanding of the two.
