CBN Parleys Jonathan to Unlock Agric Financing

Obinna Chima

24 June 2011

As part of efforts to drive its Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) aimed at reviving lending to the Nigerian agricultural sector, the Central Bank of Nigeria (CBN) has concluded plans to organise a two day conference.

The meeting which has President Goodluck Jonathan, as the special guest of honour, the apex bank said is veritable platform to engage the President on the NIRSAL concept.

The notice of the meeting, obtained on the CBN’s website Thursday, also explained that it will offer an opportunity to discuss and take decisive action on key policy issues on the agric sector.

The CBN also reiterated that it will invest an estimated sum of $500 million in the programme.

The conference tagged: “NIRSAL: A Financing Mechanism for a Holistic Transformation of the Nigerian Agricultural Landscape,” commences in Abuja on July 5.

The CBN restated that NIRSAL is a dynamic, holistic approach that tackles both the agricultural value chain and the agricultural financing value chain.

It added: “NIRSAL does two things at once; fixes the agricultural value chain, so that banks can lend with confidence to the sector and, encourages banks to lend to the agricultural value chain by offering strong incentives and technical assistance. NIRSAL unlike other schemes which encouraged banks to lend, without clear strategy to the entire spectrum of the agricultural value chain, emphasises lending to the value chain and to all sizes of producers.”

According to the CBN, a breakdown of how the sum of $500 million will be invested on the programme shows that risk-sharing facility will get $300 million.

The CBN added, “This component would address banks’ perception of high-risks in the sector by sharing losses on agricultural loans. Insurance facility to get $30 million and the facility’s primary goal is to expand insurance products for agricultural lending from the current coverage to new products.

“Technical Assistance facility will get $60 million to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products, Holistic Bank Rating Mechanism to get $10 million while Bank Incentives Mechanism to be allocated $100 million.”

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