James Emejo in Abuja
The Managing Director/Chief Executive, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Mr. Aliyu Abdulhameed has disclosed that over N14.5 billion had been catalysed in additional financing from commercial banks’ balance sheets while leveraging NIRSAL’s Credit Risks Guarantees (CRGs) scheme and other de-risking mechanisms.
He added that efforts had reached various stages of approval for an additional N48 billion from banks to boost agriculture financing.
The commitments of the financial institutions were reportedly made possible through an ongoing engagement by NIRSAL with the management credit committees of commercial banks in continuation of its efforts to get more funds into agriculture by strengthening the handshake between finance and agriculture.
The MD stressed that the purpose of the exercise was to notify them of promising investment-friendly developments in Nigeria’s emerging agriculture/agribusiness sector and the expanding opportunities for value chain actors, with the aim of unlocking banks’ balance sheets to agribusiness lending.
He said: “The context for these efforts is that for years, the agriculture sector has received less than 3 per cent of total bank lending, leaving it largely underdeveloped and its vast potentials for economic growth untapped.
“To address this, the Central Bank of Nigeria (CBN) created NIRSAL to collaborate with all public and private sector stakeholders to fix broken agricultural commodity value chains and de-risk the sector to enable increased inflow of finance and investments.”
NIRSAL’s meeting with banks was mainly to pitch its agricultural finance risk management innovations and agribusiness models that take cognizance of banks’ desire to invest but only in secure, risk-controlled and structured environments.
The agency had been in talks with Union Bank, Sterling Bank, Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), Keystone Bank, Standard Chartered Bank, Heritage Bank and Unity Bank over the last five months of the maiden engagement while more banks and other financial institutions have reportedly expressed interest to be engaged in the subsequent phases over the coming weeks.
The MD stressed that the NIRSAL risk-led agricultural financing approach had so far been adjudged to be in high resonance with banks risk/return imperatives.
He said:”The prior perception of high risk by banks is gradually giving way to a new-found faith in the new business opportunities the sector has to offer.
“Going forward, the enhanced understanding of NIRSAL’s role in securing a safe, profitable and a globally competitive agribusiness economy is expected to elicit greater portfolio commitments from Nigerian banks in sponsoring the NIRSAL-led agribusiness initiatives and developing joint frameworks aimed at facilitating a greater flow of finance to structured, agriculture-related investment opportunities in Nigeria.”
However, Abdulhameed, in his presentation titled: “Unfolding Opportunities in Agricultural Financing”, highlighted NIRSAL’s acquisition and planned utilisation of geospatial technologies for identification of the most ecologically endowed areas for specific commodities, and for the aggregation of fragmented farmlands.
He said these technologies include the acquisition of Satellite Imaging data to be supported by Unmanned Aerial System (UAS) platforms adjudged to be the most efficient technological platform for monitoring large swathes of farmlands, remote sensing of crop health status and to serve as an early warning system to control risk events in the field.
He said the agency’s engagements with banks started with the successful NIRSAL-sponsored Bank Chief Risk Officers’ (CRO) Retreat held in Lagos in October 2018.