In its quest to ensure the revival of Nigeria’s agricultural economy and in support of the Buhari administration’s policy decision to diversify Nigeria’s economic base and restore agriculture to its enviable position as Nigeria’s economic mainstay, the Central Bank of Nigeria under the dynamic leadership of its Governor, Mr. Godwin Emefiele, has recently appointed the executive management of NIRSAL to drive its sustainable financing of agricultural value chains in Nigeria. This remarkable act of the CBN, has rekindled the hope of Nigerian farmers and all agricultural value chain actors including input suppliers, primary producers/farmers, value-added processors of agricultural raw materials through marketers and distributors of agricultural commodities.
The Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), an initiative of the Central Bank of Nigeria (CBN), the Bankers Committee and the Federal Ministry of Agriculture & Rural Development supports commercial financing of end to end agricultural value chains through a project management approach that emphasizes value for money, leverage, commercial viability and self sustainability. It covers all crops, livestock, fishery and poultry projects in Nigeria and it has a special bias for youth entrepreneurship in agribusiness along the entire value chain.
NIRSAL, a $500 Million (N100 billion) public private initiative (wholly owned by the Central bank of Nigeria) was incorporated as a Public Limited Liability Company and licensed as a Non-Bank Financial Institution with the primary mandate of facilitating the flow of credit to agribusiness value chain players and collaborating with stakeholders to fix broken agricultural value chains in Nigeria.
The company essentially administers a risk sharing fund designed to identify, redefine, measure, re-price and evolve strategies to de-risk and catalyze lending to the Nigerian agriculture value chain. Its primary goal is to serve the Nigerian small holder farmer and all other value chain players through the provision of incentives to rapidly raise agricultural productivity, promote social equality, improve incomes of farmers through better links to agricultural markets, create jobs and secure food supply for global competitiveness.
Built on a legacy of previous CBN interventions in agriculture that helped create thousands of jobs in the past, NIRSAL is envisaged to fix the broken agricultural value chain in order to provide a veritable platform for de-risking agricultural lending, mobilize financing for Nigerian agribusinesses by using credit guarantees to address the risk of default, provide technical assistance through capacity building across the value chains to enhance productivity, reduce the cost of borrowing, diversify the economy from oil to agriculture in the light of the current decline in oil revenue and enhance the Internally Generated Revenue sources for states through export of Agricultural products.
As a flexible financing tool designed to change the behavior of financial institutions towards agricultural lending, NIRSAL is meant to cover all crops and livestock activities in Nigeria, while driving improved investment outcomes and job creation. It is an all purpose vehicle that will establish the much needed linkages between the financial system and the agricultural production/value chain system capable of engendering the much desired growth, transformation and sustainability of the rural economy and indeed that of the nation.
It is worthy of note that from inception in 2012/13 to the end of year 2015, during its incubation as a project implementation office within the Development Finance Department of the Central Bank of Nigeria, 454 projects valued at ₦61.161 billion have been guaranteed by NIRSAL, with the sum of ₦753.36 million paid out as interest rebate to borrowers who repaid promptly to encourage good repayment behavior thereby minimizing default. In addition, to date, NIRSAL has trained over 112,000farmers across the country.
Its engagement mechanism revolves around Research & Innovation, agricultural inputs supply, production, processing, wholesale and retail and advocacy for the resolution of cross-cutting issues that negatively affect agricultural development such as rural infrastructure, rebranding of agriculture as a business and international trade terms that affect Nigeria’s agricultural export commodities.
An issue of topical socio-economic concern to the polity today and for which this mechanism can be deployed is the employment &empowerment of youths, especially graduates (Women inclusive) as Agribusiness Entrepreneurs. NIRSAL can build the capacity of these youths and establish them as entrepreneurs inMarket-Oriented, Demand-driven value chain enterprises financed sustainably through NIRSAL-Guaranteed private sector sources eg banks while substantially reducing the cost of funds (Interest Rate) through its Interest Draw-back fund.
By engaging a new generation of youthful farmers supported by the latest science, technology and innovations in agriculture/agribusiness, these youths can be oriented to specifically target the huge food import substitution market in Nigeria of about N2 trn for rice, wheat, fish, tomato, milk, beef, cotton & textile, sugar, vegetable oils & oil seeds (soya beans, cotton seed, g/nuts), starch, malt, exotic fruits and vegetables. In addition to this, a billion dollars worth of export markets exist for Cotton Lint, Sesame, Ginger, Cocoa, Cashew, Chili, Cocoa, Cassava products and Hides & Skin and a corresponding Multi-billion Naira domestic Market of 170 million people for quality and value-added staple food crops.
It is remarkable that the NIRSAL mechanism can be leveraged to create a young and educated successor-farmer generation to replace the ageing farming population with young people engaged in productivity-driven, technology-based, and highly remunerative agribusinesses. This has the potential to ultimately yield highly remunerative jobs to at least 100,000 graduate youths and an additional 400,000 non graduate youths that would be gainfully engaged to competitively exploit the opportunities in the import substitution markets, the agricultural commodity export market, and also meet domestic demand in quality value-added staple food crops and quality & reliable raw material supplies to the domestic agro-based industry.
These employment opportunities are to be harnessed through internship, entrepreneurship, jobs and services in the following agricultural value chain segments: research & Innovation, project design & feasibility studies, project management, input production & supplies, mechanization services, primary production of crops, livestock, poultry and fishery; aggregation & storage services, primary processing, SME value-added processing, industrial value added processing; packaging, branding and marketing services, logistic services and wholesale & retail services.
To achieve this, NIRSAL will be collaborating with the federal and state governments and their respective MDA’s to utilize existing training and skill acquisition facilities; nurture and mentor the youth; build on current government initiatives; facilitate broad based policy dialogue, coordination and partnerships; improve access to financial services for the beneficiaries; set up stategovernment steering committees for effective project implementation & Project Monitoring Offices; utilize existing producer/value chain groups & associations; conduct agriculture-industry roundtables to create efficient and reliable supply chain of raw materials from primary producers to industry thus enabling raw material supply security for agro-based processing companies in the production, processing and utilization of agricultural produce.
In the final analysis, NIRSAL as public liability company wholly owned by the Central Bank of Nigeria is expected to lay the foundation and manage the processes required for massive foreign & domestic investment inflow in the agricultural subsector of Nigeria’s economy.This will result in job creation, stemming rural-urban migration, increase food production, increase real incomes to farmers and rural dwellers, provide raw materials for industries, improve foreign exchange earnings, strengthen local markets, encourage rural creativity and best practices, and ultimately reduce social and political tensions.
Ibrahim Mohammed
