FACILITATES N66.3B FINANCIAL FLOWS TO AGRICULTURE
The Nigeria Incentive Based Risk Sharing System (NIRSAL) has created at least 360,000 direct jobs and impacted about 1.8 million lives through the projects in the agriculture sector that it has facilitated finance to and supported in other ways. The projects are in primary production, processing, logistics and input supply with smallholder farmers constituting most beneficiaries. The impact has enhanced income and improved standards of living.
This was revealed by the Managing Director of NIRSAL, Aliyu Abbati Abdulhameed during a paper presentation titled “De-risking Nigerian Agriculture Through Innovative Financing” at the Premium Times National Symposium on Agriculture with the theme: Fixing the Agriculture Value Chain holding in Abuja.
Abdulhameed explained that to create the impact NIRSAL in line with its mandate to de-risk agriculture and increase bank lending to the very important sector facilitated $66.3 in financial flows to agriculture since its inception. He noted that the corporation was able to attract the amount of finance from local commercial banks, international finance institutions and development partners because of its effective and transparent deployment of the $300M Risk Sharing facility that it uses to provide credit guarantees.
The risk sharing facility enables NIRSAL to share credit risk with lenders by providing credit guarantees for loans provided by financial institutions to viable agricultural projects ranging from 30 per cent to 75 percent.
The categories of the qualifying agricultural projects that have benefitted include primary production, agro processing, mechanization, inputs supply, logistics/haulage, storage and post-harvest handling, and preselected value chains.
According to the NIRSAL MD, the financial inflows are in the form of investments and loans that cover 631 agricultural projects across several agricultural value chains ranging from primary production, mechanization, processing to logistics.
The specifics categories that benefitted and the sums are as follows:
- Processing: N12bn
- Primary Production: N10bn
- Mechanization: N1bn for the purchase of 447 tractors
- Government Interventions such as GES and RUFIN: N39bn
To ensure proper use of the loans and success of the projects, Abdulhameed stated that NIRSAL has leveraged its Project Monitoring and Remediation Offices (PMRO) located across the 36 states in the country to maintain close project supervision of the projects.
NIRSAL has also developed an innovative system of direct payment to service providers to minimize the likelihood of loan diversion by beneficiaries. For instance, in primary production, beneficiaries are provided with inputs such as improved seedlings, fertilizer, pesticides etc.
Abdulhameed further stated over the past couple of years, NIRSAL has implemented an effective risk management framework for handling investments in agriculture. He elaborated that NIRSAL has deployed project monitoring offices nationwide, set up technology driven field monitoring systems, institutionalized a technical capacity support framework to ensure good agricultural practices and created links and collaborations with research institutions to increase the chances of success of agricultural projects that are helping to minimize investment risk in agriculture that is giving banks comfort to lend to the sector.
The NIRSAL MD, thanked the organizers of the symposium for creating a platform for strengthening the narrative on the urgency to move Nigerian agriculture from potential to reality.