The House of Representatives has urged the Central Bank of Nigeria (CBN) to provide an additional $3 billion in funding to small-scale farmers to boost their productivity through the Nigeria Incentive-Based Risk Sharing for Agricultural Lending (NIRSAL).
This followed the adoption of a motion during plenary on Tuesday titled ‘Repositioning Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and De-risking of Agribusiness in Nigeria’, moved by the member representing Idemili North/Idemili South Federal Constituency, Hon. Uchenna Okonkwo.
Leading the debate, Okonkwo recalled that in 2011, the CBN launched NIRSAL, “a dynamic, holistic $500m public-private initiative to define, measure, price, and share agribusiness credit risk”.
He said that objectives are 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.
He further noted that the agricultural sector which accounts for 40 per cent of the nation’s Gross Domestic Product and provides for over 60 per cent of employment, has experienced slower growth recently and is underperforming despite enormous potential.”
Okonkwo further argued that to reverse the worrisome development, there is a need to tickle the challenge of under financing of agricultural value chains by providing NIRSAL with an additional $3bn for lending to agricultural value chain actors in Nigeria.
He also called for a reduction of banks’ break-even interest rate for agricultural value chain borrowers between 7.5 to 10.5 per cent.
Following the adoption of the motion in a voice vote, the House urged the CBN to increase agricultural lending by banks from 1.4 to 7 per cent of total lending within the next five years, ensure 50 per cent of lending to smallholder farmers through micro-finance institutions, farmer cooperatives, and the value chain commodity association at an interest rate of 7.5 to 10.5 per cent.
It further mandated the Committees on Banking Regulations and Agricultural Production and Services, Nutrition and Food Security, and Finance to monitor compliance and report for further legislative actions within four weeks.
