The House of of Reps has called on the Central Bank of Nigeria (CBN) to provide an additional $3 billion in funding to small-scale farmers through the Nigeria Incentive-Based Risk Sharing for Agricultural Lending (NIRSAL) to boost their productivity.
This followed the adoption of a motion during Tuesday’s plenary titled “Repositioning Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and De-risking of Agribusiness in Nigeria,” presented by Rep. Uchenna Okonkwo, representing Idemili North/Idemili South Federal Constituency, Anambra State.
In his argument, Okonkwo recalled that the CBN launched NIRSAL in 2011 as a $500 million public-private initiative aimed at managing agribusiness credit risk. NIRSAL’s objectives include enhancing agricultural and financial value chains by promoting sound practices in agricultural financing, loan utilisation, and repayment, thus mitigating the risk associated with agricultural lending.
House of Reps
He further highlighted that despite agriculture contributing 40% to Nigeria’s GDP and employing over 60% of the population, the sector has experienced slowed growth and underperformance. Okonkwo emphasized the need for an additional $3 billion in funding for NIRSAL to support actors in the agricultural value chain and address the financing gap.
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The House also urged the CBN to reduce banks’ break-even interest rates for agricultural value chain borrowers to between 7.5% and 10.5%. Following a voice vote, the House recommended increasing agricultural lending by banks from 1.4% to 7% of total lending over the next five years, with 50% of that lending directed to smallholder farmers through microfinance institutions, farmer cooperatives, and value chain commodity associations, at the same interest rate.
The Committees on Banking Regulations, Agricultural Production and Services, Nutrition and Food Security, and Finance were tasked with monitoring compliance and reporting back for further legislative actions within four weeks.
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