The Central Bank of Nigeria (CBN) Wednesday disclosed the approval of N75 billion for the take-off of Nigerian Incentive-Based Risk Sharing in Agricultural Lending (NIRSAL) to farmers.
Under the scheme, the apex bank is to guarantee 75 percent of the loans that would be provided by Deposit Money Banks to farmers across the 36 states of the federation and Federal Capital Territory (FCT).
The facility, according to Jude Uzonwanne, head of NIRSAL project implementation office under the Development Finance Department of the CBN, was packaged under a public private established by the CBN, Bankers' Committee and Federal Ministry of Agriculture and Rural Development.
Uzonwanne, while presenting the NIRSAL scheme to Olajumoke Akinjide, minister of state for FCT in Abuja, explained that the guarantee would be issued to qualified farmers in the states and FCT through commercial banks and other financial institutions.
He said: "NIRSAL mobilises financing for Nigerian agribusiness by using credit guarantees to address the risk of default. 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 that the CBN programme was designed to create access to finance 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 five pillars, particularly the Risk Sharing Pillar and the Technical Assistance pillars such as Risk sharing Facility (N45b), Insurance Facility (N4.5bn), Technical Assistance Facility (N9bn), agricultural bank rating scheme (N1.5bn), and bank incentive mechanism (N15bn).
"NIRSAL will share risks with banks ranging from 30 percent to 75 percent of loss, depending on the segment. We are prepared to offer following terms to farmers in the states and FCT Abuja: 75 percent guarantees on all input, working capital and limited living cost loans to plant the crop, and loan duration should be about 24-28 months," he stated.