NIRSAL, BOI partner to boost agriculture
Extend loans to farmers, processors
Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), and the Bank of Industry yesterday signed a Memorandum of Understanding (MoU), with a view to tackling post-harvest losses estimated at 60 per cent across the agriculture value chain.
Under the terms, the collaboration will lead to the identification and financing of impactful agricultural projects within all the segments of the agricultural value chain, beginning from primary production for the purpose of producing raw materials and sustaining the processing industries.
It will also provide funding opportunities, within fixed value chains, for bankable agricultural production projects and for agro-allied industries that have strong capacity to off-take primary agricultural produce.
The historic collaboration between the two agencies, will, for the first time, make possible the extension of BOI’s credit facilities to primary producers generally and smallholder farmers in the crop, livestock or fishery subsectors.
Equally, agro-input suppliers for fertilizer, seeds, crop protection chemicals, fish and livestock feeds as well as agricultural mechanisation service providers stand to benefit from this unique and strategic collaboration.
This is made possible on the strength of NIRSAL’s Credit Guarantees, its Risk Sharing Framework and its Value Chain-Fixing mandate which, combined, will enable the Bank of Industry to lend confidently into complete, end to end, agricultural value chains while at the same time protecting its balance sheet.
The move is also meant to boost import substitution, job creation, stimulate inclusive growth and realise the key objectives of the Agricultural Promotion Policy (APP) of the President Muhammadu Buhari’s administration.
Again, the partnership is important because it will leverage the multi-billion naira balance sheet of the Bank of Industry, to make loans and credit available, at very low interest rates, to commercially viable agricultural projects that have been packaged, de-risked and linked to structured markets by the NIRSAL.
In addition, projects financed under this framework stand to enjoy faster credit facility processing turn-around time estimated to be up to 50% faster than when accessing it from commercial banks.
Speaking at the event, the Managing Director, NIRSAL Aliyu Abdulhameed, said that unlocking the sustainable development finance window to the agricultural economy of Nigeria, as this collaboration represents, is a paradigm shift.
He said: “We are really excited at the potential impact that this partnership with the Bank of Industry will have on the agric value chain in the areas of boosting production, reducing post-harvest losses and helping to build a stronger post oil economic base for the country. We have started with the Bank of Industry to ensure that we produce and consume locally.”
He added that this opens a window of opportunities for farmers to access affordable agricultural finance that will have a crowding-in effect on commercial banks and an immediate positive impact on the economic diversification agenda of the current administration.
“Our goal is to help Nigerians take advantage of the $22billion food import substitution market by producing the food locally, in order to balance our terms of trade with other countries where we spend our scarce foreign exchange for essential imports. NIRSAL will shortly be announcing another collaboration with the NEXIM Bank, to unlock sufficient flow of finance to agricultural value chain players for the export markets. We will focus on value addition to raw agricultural produce before exporting them to other countries.”
NIRSAL’s mandate is to serve as a catalyst for national agricultural revolution by boosting commercial agricultural productivity, competitiveness, value addition, and market access and food security through the mechanism of de-risking the agricultural value chain in order to encourage investment by banks and the entire financial sector.
The agency focuses on enabling a structured, sustainable and business oriented approach to agriculture that can stand the country in good stead in the emerging post oil Nigerian economy.
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