Banks, States Embrace NIRSAL’s Ratings Project


James Emejo in Abuja
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has activated its ratings and incentive pillars as part of a broad mandate to fix the broken agricultural value chains.

This, is to further stimulate the flow of finance and investment into the agri-business sector.
Essentially, the rating facility seeks to assess the performance of key stakeholders such as financial institutions and state governments on the effectiveness of their agricultural policies and programmes.

The first phase of this ratings exercise is targeted at banks, insurance companies and state governments.
A statement from the agency which was made available to THISDAY, explained that the pilot phase of the exercise was expected to commence on May 13, 2019, with six financial institutions including Stanbic Bank IBTC, Ecobank, Sterling Bank, AIICO Insurance, AXA Mansard and LAPO Microfinance Banks – all of which have expressed interest in participation.

At least three state governments would also be assessed during this pilot phase. The results of the pilot phase would be used to design a comprehensive roll-out of the ratings programme for all interested stakeholders.

According to NIRSAL: “The rating and incentive pillars represent the last two of the five pillars of NIRSAL to be activated. The first three are the risk sharing facility, the technical assistance facility and the insurance facility.

“These five strategic pillars provide the funding basis for NIRSAL’s de-risking operations and interventions across the agricultural value chain.
“To successfully activate its rating and incentive pillars, NIRSAL has developed a scoring methodology for these three clusters to enable independent assessment of their agricultural activities.

“These scoring methodologies have been validated by the relevant stakeholders through a consultation workshop held in November 2018. The consultation programme was well attended by participants from Access Bank, WEMA Bank, Sterling Bank, First Bank, LAPO Microfinance Bank, Leadway Assurance Company Limited, AXA Mansard Insurance Plc, AIICO Insurance Plc, Royal Exchange General Insurance Company Ltd, Nigerian Agricultural Insurance Corporation (NAIC), Industrial and General Insurance Company Plc, Bauchi State Ministry of Agriculture, Ekiti State Ministry of Agriculture amongst others.

It added: “The scoring methodology to be deployed for banks rates them according to their organisational commitment to agriculture, quality of their agricultural portfolio and recognises smallholder farmers’ inclusion and innovation in their agric lending activities.
“Insurance companies will be rated based on the innovative agricultural insurance products developed, customer acquisition and satisfaction and timely processing of claims.

“The rating of sub-national governments will assess the ease of doing agribusiness in the respective States with a view to improving access to critical factors of production and providing the enabling and regulatory environment necessary for agribusinesses to thrive.”

It further noted that the results of the exercise would also be used to develop a comprehensive incentives programme which would reward innovation and encourage healthy competition among financial institutions and state governments to support the agribusiness sector and encourage smallholder farmers’ inclusion.