The House of Representatives on Tuesday tasked authorities of Central Bank of Nigeria (CBN) to provide additional sum of $3 billion to Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) for lending to the agricultural value chain.
The resolution was passed sequel to the adoption of a motion on the need to reposition NIRSAL for agricultural lending and de-risking of agribusiness in Nigeria, sponsored by Hon. Uchenna Okonkwo.
In his lead debate, Hon. Okonkwo observed that the ailing economy of Nigeria, severe impoverishment across the nation, as well as the increase in hunger due to decreased agricultural productivity triggered by low capital investment and insufficient funding of agricultural production.
“The House also notes that in 2011, the Central Bank of Nigeria launched and incorporated the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) as a dynamic, holistic $500 million
public-private initiative to define, measure, price, and share agribusiness credit risk.
“The House is aware that the objectives of NIRSAL is to enhance agricultural value and financial value chains, by promoting good practices in agricultural financing, loan utilisation, and repayment, thus reducing the risk of agricultural lending.
“The House is concerned that the agricultural sector, which accounts for 40% of the nations’ Gross Domestic Product (GDP) and provides for over 60% of employment, has experienced slower growth recently and is underperforming despite enormous potential.
“The House is convinced that to reverse the trend, there is need to tackle the challenge of under-financing of agricultural value chains by providing NIRSAL with additional $3 billion for lending to agricultural value chain
actors in Nigeria.
“The House is cognizant of the need to reduce banks break-even interest rates to agricultural value chain borrowers from 7.5–10.5%,” he noted.
To this end, the House urged the apex bank to increase agricultural lending by banks from 1.4 – 7% of total lending within the next five years, ensure 50% of lending to Smallholder Farmers (SHF) through Microfinance Institutions (MFIs), Farmer Cooperatives, and the value chain commodity association at an interest rate of 7.5–10.5%.”
Hence, the House mandated the joint Committees on Banking Regulations and Agricultural Production and Services, Nutrition and Food Security, and Finance to monitor compliance and report within four weeks for further legislative actions.
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