National Economic Council okays Agricultural Lending System (NIRSAS)

THE Nigerian Incentive-based Risk Sharing Agricultural Lending System (NIRSAS) yesterday  endorsed a new agric lending scheme for the country.

Tagged ‘Nigerian Incentive-based Risk Sharing Agricultural Lending System (NIRSAS),’ it is aimed at increasing farmers’ access to credit.

The council also said N120 billion out of the N200 billion agriculture loan scheme has been lent out to various agricultural companies and about 24 states.

According to Benue State Governor Gabriel Suswam, who briefed newsmen alongside his Bauchi State counterpart, Isa Yuguda and Central Bank of Nigeria (CBN) Acting Governor, Dr. Kingsley Moghalu, the initiative is aimed at increasing agricultural lending.

Suswam said the new scheme was an idea of the apex bank in partnership with some stakeholders including the Presidency, the Minstries of Agriculture, Finance and the governors.

Moghalu, who explained  the CBN initiative, said the intention is to increase the total agriculture lending from its  1.4 per cent of total bank lending to at least seven per cent over the next 10 years.

“If you lend to agriculture in this manner, all the gaps that had previously existed in agricultural lending will be closed and lending to agriculture will create a quantum increase in productivity.

“Lending to agriculture in this country is very low at this point. It is 1.4 per cent of total bank lending in Nigeria that goes to agriculture. That is compared to 10 per cent of total bank lending in countries like Brazil , Mali, Burkina Fasso.

Moghalu further said NIRSAS would also tackle the risk in lending to agriculture sector by commercial banks and create a risk sharing mechanism whereby CBN shares the risks with the Commercial Banks in lending to agriculture sector.

The scheme, he added, would create an insurance mechanism that increases the insurance that is available to farmers and help to overcome the absence of collaterals.

He noted that the scheme is would be private sector driven  with the banks leveraging their own balance sheet while the CBN will only participate in it by providing risk sharing mechanism.

Moghalu also assured that the small scale farmer will not be left out of the scheme, saying they will all benefit from the scheme by organising themselves into groups, or larger agricultural farms to assess credit.

On the N200 billion commercial agriculture credit scheme approved by NEC in 2010, Moghalu said the apex bank has taken steps to increase access to the fund by agricultural companies.

“About N120 billion out of the N200 billion have been lent out to various agricultural companies and to governors,  I believe, about 24 governors have assessed the fund,”he said.

Nation