The Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) and the Nigerian Export-Import (NEXIM) Bank have concluded plans to boost agricultural finance and harness export opportunities within the country.
Under the partnership, NIRSAL will absorb the risk component of agriculture export financing while NEXIM will provide the export financing and credit guarantee. Expectedly, the collaboration will lead to the identification and financing of impactful agricultural projects within all the segments of the agricultural value chain and optimally harness Africa’s huge agribusiness potential.
According to the International Finance Corporation, IFC, a member of the World Bank Group, Sub-Saharan Africa’s agriculture and agribusiness market, which is currently valued at about US$450 billion, is projected to reach US$1trillion by 2030. Africa’s economic growth since the 1990s, burgeoning urbanization, and a relatively buoyant global commodity markets now provide unprecedented market opportunities in the agribusiness sector.
However, harnessing these opportunities requires de-risking agriculture financing and increasing production and export; a feat the collaboration is expected to achieve.
NIRSAL is an arm of the Central bank of Nigeria (CBN) that provides guarantees on agribusiness investments to help reduce credit risk in agricultural lending, plans to facilitate about N60 billion in fresh commercial bank credit to farmers in the current financial year.
The broad objective is to increase lending to 3.8 million farmers by 2026, through cooperatives and value chains, and also, to reduce the break-even interest rate to agribusiness borrowers from 22 per cent to between 7.5 per cent and 10.5 per cent.
The move aims to enhance the access of farmers to credit as well as increasing production and export, to take advantage of the opportunities in the continent’s agricultural sector.