THE Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc) has facilitated the flow of over ₦73 billion into Nigeria’s Agro Processing industry.
This was disclosed by the Managing Director, NIRSAL, Aliyu Abdulhameed, during a media interactive session held in Abuja.
Abdulhameed while speaking on the achievements made by NIRSAL in carrying out its mandate of creating a stronger linkage between segments of Nigeria’s Agricultural Value Chain (AVC) and subsequent AVC-linkage to commercial bank finance, explained that the ₦73 billion flow into Nigeria’s Agro Processing industry to date was from various sources, including deposit money banks, development financiers, private equity investment firms and other financial institutions.
According to him, other beneficiaries of NIRSAL Plc’s finance-facilitation include pre-upstream, upstream and downstream AVC operators involved in Inputs Production and Supply, Mechanization Service Provision, Primary Production and Logistics.
He also pointed that this feat, which has made a notable contribution to the Federal Government’s Agric promotion drive, was achieved through NIRSAL Plc’s effective deployment of its Credit Risk Guarantee (CRG) instrument.
He said: “In carrying out its mandate of creating a stronger linkage between segments of Nigeria’s Agricultural Value Chain (AVC) and subsequent AVC-linkage to commercial bank finance, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc) has facilitated the flow of over ₦73 billion into Nigeria’s Agro Processing industry to date from various sources, including deposit money banks, development financiers, private equity investment firms and other financial institutions.
“NIRSAL Plc’s strategic support to Agro Processors which operate within the midstream segment of the AVC creates a profit-driven ecosystem in which farmers in the upstream AVC segment have a reliable market in the form of Agro Processors who offtake farmers’ produce, add value and satisfy consumer demand in the downstream AVC segment NIRSAL Plc’s support comes at a time in which developing economies are increasingly shifting from only producing raw materials to both production and value addition for increased economic activity, bolstering Foreign Exchange earnings and widespread social development.”
Meanwhile, he explained that the NIRSAL CRG is NIRSAL Plc’s core product 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; the riskier the farmer group or agribusiness operations, the higher the percentage of risk NIRSAL Plc shares.
“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 NIRSAL 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, increase their profits and enhance their livelihoods.
“To provide further support to Nigeria’s farmers and agribusinesses, NIRSAL Plc, through its Interest Drawback (IDB) scheme, goes the extra mile to reward diligent borrower behaviour through discretionary rebates of up to 40 per cent of interest paid on NIRSAL CRG-backed agribusiness loans. To date, NIRSAL Plc has paid out over ₦1.64 billion, thereby reducing the effective interest rate for borrowers with a good credit history.