To tackle one of the significant challenges facing Nigeria’s agriculture – the estimated 60 percent post-harvest losses across the value chain – the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)  signs a Memorandum of Understanding (MoU) with the Bank of Industry.

The MOU will also boost import substitution, boost job creation, stimulate inclusive growth and realize the key objectives of the Agricultural Promotion Policy (APP) of the Buhari Administration.

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 particular whether they are in the crop, livestock or fishery subsectors.

Equally, agro-input suppliers for Fertilizer, Seeds, Crop protection Chemicals, Fish & Livestock Feeds as well as Agricultural Mechanization Service providers stand to benefit from this unique & 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.

Specifically, the MOU will lead to the identification and financing of impactful agricultural projects within all the segments of the agricultural value chain. Starting 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 a strong capacity to off-take primary agricultural produce.

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 Mr. Aliyu Abdulhameed stated that unlocking the sustainable development finance window to the agricultural economy of Nigeria, as this collaboration represents, is a paradigm shift and a step change into 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 Buhari administration:

“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. Our goal is to help Nigerians take advantage of the $22bn food import substitution market by producing the food locally. And 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 a collaboration with the NEXIM Bank to unlock sufficient flow of finance to agricultural value chain players for the export markets where NIRSAL will focus on value addition to raw agricultural produce before exporting them to other countries.”

NIRSAL’s mandate is to catalyze a national agricultural revolution by boosting commercial agricultural productivity, competitiveness, value addition, 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 focus of NIRSAL is 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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