How NIRSAL is Financing What Nigeria’s Budget Can’t

By Jonah Solomon

Although agriculture contributes 24.6% to Nigeria’s GDP, budgetary allocation to the sector accounts for only 1.32% of the national budget. This mismatch underscores one of the biggest paradoxes in Nigeria’s development story — a sector that sustains livelihoods and anchors food security continues to receive minimal fiscal attention. The result has been years of underinvestment, poor mechanization, and an overreliance on subsistence farming.

Faced with this chronic underfunding, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has emerged as one of the country’s most innovative responses to the financing gap in agriculture. Designed to de-risk agricultural lending and make the sector more attractive to banks and investors, NIRSAL bridges the divide between finance and the farm, proving that agriculture can be both profitable and sustainable.

Since inception, NIRSAL has facilitated over ₦270 billion in agricultural financing from banks and other financial institutions, with a failure rate of less than 1%. These results reflect not just efficiency but the power of strategic innovation in a sector long considered unbankable. By leveraging guarantees, technical assistance, and value chain linkages, NIRSAL is helping financial institutions lend confidently while empowering agribusinesses to grow.

Under its renewed leadership, NIRSAL is refining its model to address the structural weaknesses that have historically limited access to finance. The agency now emphasizes integrated value chain financing, blending conventional and alternative finance facilitation, risk-sharing frameworks, and partnerships that bring together banks, producers, and off-takers in commercially viable ecosystems. Its focus is clear: to unlock more capital for Nigeria’s agricultural value chain, empowering smallholder farmers, agritech startups, processors, and exporters.

Recent performance data shows that this renewed strategy is working. In the first three quarters of 2025 alone, NIRSAL facilitated more than ₦70 billion in commercial financing for agriculture — its strongest annual performance since inception. This momentum has, unsurprisingly, coincided with a rebound in overall bank lending to agriculture, which rose from 4.82% of total credit in 2024 to 5.33% by mid-2025, suggesting a return of confidence in the sector, anchored on structure rather than subsidies.

NIRSAL’s forward-looking agenda also extends to the digital and green frontiers of agriculture. Through initiatives like the upcoming NIRSAL LandBank Portal and its collaboration with the Rural Electrification Agency for off-grid power in agro-processing clusters, the institution is aligning agricultural finance with technology and sustainability. These innovations not only expand access to credit but also help Nigeria tap into emerging global opportunities in climate finance and green investment.

The implications of NIRSAL’s model go beyond agricultural financing. They point to a sustainable policy pathway where creative institutions complement limited public budgets by mobilizing private capital at scale. With food inflation high and the government focused on achieving a $1 trillion economy, NIRSAL’s role has become indispensable.

If Nigeria truly aims to feed its people, strengthen exports, and build shared prosperity, then it must look beyond traditional budgetary allocation. The example of NIRSAL shows that where the budget ends, innovation begins, and that with the right blend of risk-sharing, discipline, and data, the financing gap in agriculture can indeed be bridged.