NIGERIA INCENTIVE-BASED RISK-SHARING SYSTEM FOR AGRICULTURAL LENDING
(NIRSAL)
Transforming Nigeria’s Agricultural Landscape
State of The Nation
Nig. Economy
slowdown in economic activity and sluggish growth - Economy in recession
 GDP averaged 0.18 percent from 2013 until 2016
 1.7% GDP contraction from $493B in 2015 to $415B in Oct, 2016
o economy adversely affected by external shocks - fall in global price of crude oil
o adversely impacted by inadequate supply of forex
o aggravated by the forex restrictions targeting 41 imports items
 Inflation increased from 8.1% in 2014 to an estimated 18.3% in Oct 2016
rapidly urbanising and fast-growing cities
 increasing unemployment and income inequality
Nig. Agric.
Economy
 sector accounts for over 26.8% of GDP, yet two-thirds of employment!
 broken value chains and unstructured operations – finance, production e.t.c.
o perceived as high risk sector
 failed to keep pace with Nigeria's rapid population growth
 once a large net exporter of food, now imports large quantity of its food products
 past inconsistent and poorly conceived government policies
 neglect and the lack of basic infrastructure to drive productivity
 limiting finance and land tenure system
o discourage long-term investment in tech or modern production methods
o does not inspire the availability of rural credit and commercial finance
State of The Nation - Contd
State of Agric.
Finance


formal financial system lends approx. 4% of credit to the agric. Sector – abt 1.4% 3yrs ago
Since mid 70’s, lending remained low in spite of several interventions introduced by
CBN/Govt.
Govt. New
Approach


The new administration laying foundation for renewed growth
Aggressive plan to diversify economy, using agric as leverage
o Grow integrated agric sector @ 1x to 2x the Av GDP
o Integrate agric commodity value Chains
o Promote responsible land, water and natural resources usage for employment
generation
o Facilitate govt capacity to meet food security obligation
o Create mechanism for improved governance and supervising structures
specific reforms centred on Agriculture
o Launched the Agric. Promotion Policy – building on successes of ATA
o Plan to leverage its 170 million population & consumer market worth nearly $400B


CBN’s New
Approach
Based on the lessons learned, CBN changed the method of its agric sector financing
approach to:
o Focusing on Risk-Sharing mechanism (Guarantees) rather than placing credit/funds
directly with banks
o Use of incentives and penalties to shape the behavior of players within the financial
system.
o Fixing of broken value chains by providing technical supports, etc.
NIRSAL – A Game Changer
NIRSAL
 Launched in 2011 as a new agricultural financing strategy and platform
 Focused on raising formal lending to agric. To abt. 10% by 2020 through:
o Credit guarantees on loans made to agribusiness investors, farmers, companies and
other related actors.
o Investment support and advisory to value chains actors
o Strategic interventions and advice to governments on agricultural matters
o Technical Support to key actors along the agric. value chain
 NIRSAL, as a public private initiative is designed:
o to mobilize financing for Nigerian agribusiness space by using its risk sharing
mechanism to address issues/risk of default.
o covers all crops, livestock and activities along agricultural value chains in Nigeria
o builds on a legacy of previous CBN interventions in agriculture
NIRSAL – A Game Changer - Contd
NIRSAL’s Core
Objectives
NIRSAL’s Pillars


Fix the broken agricultural value chains to de-risk agricultural lending.
Mobilize finance for Nigerian agribusiness by using credit guarantees to address the risk of
default.
 Provide technical assistance through capacity building across the value chains.
 Reduce the cost of borrowing.
 Provide technical advice to agribusinesses.
NIRSAL – A Game Changer - Contd
NIRSAL’s
Approach
 Creates access to finance by integrating end-to-end agriculture value chains with financing
value chains
NIRSAL – Guarantee & Interest Draw Back Terms
Category
Number
Category
1(a)
Smallholder Farmers, Farmer Groups(
Livestock, Poultry, Aquaculture and Single or
Mixed Cropping):
Cooperatives
Large Scale Primary Producers: ( Livestock,
Poultry, Aquaculture and Single or Mixed
Cropping):
Mechanization
Large Scale Mechanization
Processors
1 (b)
1 (c)
2(a)
2 (b)
3
4
5
6
Single Obligor
Limit (Naira)
CRG Cover
IDB Payable on
Face Value of
Loan

5 Million
75% of the loan

50 Million
75% of the loan

2 Billion
50% of the loan



50 Million
2 Billion
2 Billion
75% of the loan
50% of the loan
50% of the loan
40%
20%
20%
Integrated Farms

2 Billion
30% of the loan
20%
Logistics Provider

2 Billion
30% of the loan
20%
Agro-dealers, Input and Equipment
Suppliers:

2 Billion
30% of the loan
40%
40%
20%
20%
NIRSAL – Strides
Progress to Date
 Initiated operations in 2012 as a PIO within the CBN, with Presidential mandate to operate
as a Plc. Now fully autonomous entity with own distinct governance structure
 Successfully partnered Deposit Money Banks, State Govts, Devt Partners facilitating flow of
credit to fixed value chains.
 Developed financing models, frameworks and products supporting bank lending for input
supply, production and mechanization.
 Developed frameworks & partnered devt agencies & others - AfDB, IFAD/RUFIN, UNDP, GIZ,
PAN, INDORAMA etc facilitating finance to key agric value chain actors - agriculture-related
MSMEs, feed millers, agro dealers and out growers, youths
 Played a major role in facilitating financing to agro dealers and seed companies under GES
scheme
 From inception to date NIRSAL has succeeded in catalyzing additional lending, as credit
from banks balance sheets to the agricultural sector – Raised lending from 1.4% to abt. 4%
 Aggressive collaboration drive to develop and fix broken Agric. Value Chains
NIRSAL – Strides
Specific
Achievements
 Cumulatively executed 541 Credit Risk Guarantees - total face value of N63.5Billion
 Cumulative IDB (interest rebate to borrowers) paid stands at N830.1Million, minimizing
default.
 Supported CBN and DMBs in establishing dedicated Agric. Desks across banks
 Collaborated with GIZ and Bankers Committee to dev curriculum and trained over 20
Middle Mgt. and Agric. Desk Officers
 Trained 0ver 152,000 farmers across Nig on best practice farming techniques and business
mgt
o In collaboration with GIZ, trained 5,000, 15,000, 1000 Cotton, Cocoa and Tomato
farmers under Farmer Business School across Nig.
o Trained 86,729 rice out-growers in Kebbi State, under Anchor Borrowers Programme
(ABP)
o In partnership with Sasakawa Global, trained 15,000 farmers and Ext. Agents in Jigawa
 Under its Mechanization Financing, guaranteed commercial financing of several Millions to
Tractor Service Providers - TOHFAN, SWOFON
 Piloted financing 200 Tillers to women farmers associations - expanding to 5,000 tillers
 Implementing a USD1.5Million collateral guarantee to Rufin Mentored Micro Finance
Institutions in 12 states
 Facilitating framework for North to South rail movement of agric. produce – cattle, grains &
other agricultural commodities
 Developed advisory and Roundtable platforms with Nig Agric. Business Group - NABG
NIRSAL – Looking Through the Pipeline
Pipeline Projects
 Developing Fertilizer Financing Framework in collaboration with global fertilizer coys to
deploy a practical framework for financing affordable fertilizer supply to farmers - N6.5Billion
Proj. with Notore and Indorama about to be launched.
 Input Supply Model: NIRSAL with relevant partners (including FMARD) is developing a
commercially viable input supply model - ensure farmers access to high quality inputs and
on time, without placing burden on govt budget.
 $300Million ENABLE Youth Agribusiness Program with AfDB at advanced level of design
with the Federal Government. NIRSAL is positioned as the Implementing Partner to execute
the Program. Targeting the creation of a new generation of 37,000 youth farmers and
creating about 185,000 jobs.
 $1.5Million Collateral Guarantee Scheme – in partnership with IFAD: NIRSAL to issue
collateral guarantee to selected MFIs to enable them access the CBN Micro Small Medium
enterprise Development Fund (MSMEDF). So far 45 MFIs have been issued the certificate to
access N405.3 million of the MSMED Fund in which 2,170 farmers will benefit as loan
 Initiate a bank rating system to drive institutional assessment and reward system for
performing financial institutions in agricultural devt. and finance. To support shift from
direct govt. budget financing of agriculture to a more sustainable complementary private
sector finance window.
NIRSAL – Looking Through the Pipeline - Contd
Pipeline Projects
 Developing State Government Engagement Model: NIRSAL is developing tested and
practical framework to support State Govts drive towards agricultural devt. NIRSAL
facilitated N2Billion facility to the Sokoto State Govt to develop its Beef and Dairy markets
and businesses. Advanced discussions on agricultural finance with Jigawa, Katsina, Taraba,
Cross Rivers Bauchi etc
 Strategic Partnership with Ministry of Water Resources: Facilitate Agribusiness financing
and investments to existing River Basins and Dam Basins in Nigeria, using its FAM SMART
model - operationalize massive production around these national wasting assets.
What We Seek

Partnership with critical International and National actors to drive
interventions



Funding collaboration to drive initiatives
Capacity Building partnerships to support our Value Chain operations
Synergies to coordinate and drive appropriate advisory to Govt and other actors
within the sector
Thank You!