Central Bank of Nigeria To Invest N77 Billion in Agriculture
The Central Bank of Nigeria (CBN) has said it will invest N77 billion into the Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).
The money would be channeled in to five segments; the Risk-sharing Facility will get N42.6 billion to deal with banks’ opinion of high-risks in the sector by sharing losses on agricultural loans.
The Bank Incentives Mechanism would receive N15.4 billion and offer winning banks additional incentives to build their long-term capabilities to lend to agriculture. It will be in terms of cash awards.
The Technical Assistance Facility would get N9.24 billion to equip banks to lend to agriculture, for producers to use loans more effectively as well as increase output of better quality agricultural products.
Insurance Facility would receive N4.26 billion in order to increase insurance for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance among others while the Holistic Bank Rating Mechanism would get $10 million to decide banks’ agricultural lending effectiveness and the social impact.
Agriculture contributes 40 per cent of the country’s Gross Domestic Product (GDP), and is estimated to provide over 60 per cent employment.
The apex bank said NIRSAL was unlike the previous schemes where banks lent money without a clear strategy of the range of the agricultural value chain. The CBN believes that this would tackle both the agricultural value chain and the agricultural financing value chain.
The body is to fix the agricultural value chain, so that banks can lend with confidence to the sector. Banks were urged to lend as well as offer them strong incentives and technical assistance for utility. By Daily Times