NIGERIA – The Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has secured a total of US$12.48 million (N4.5bn) from four deposit money banks to boost cereal production in the country.
According to a report by the Punch, the Stanbic IBTC has committed a sum of US$5.54 million (N2bn), Sterling Bank Plc, US$4.16 million (N1.5bn) while the Union Bank Plc will provide US$2.77 million (N1bn) which will be channelled to facilitate cultivation of maize and soybeans in three states.
The Managing Director, NIRSAL, Aliyu Abdulhameed, said that 3,750 farmers would benefit from the funding in Niger, Ekiti and Benue states.
He said 107.5 metric tonnes of seeds worth about N65.5m (US$0.18m) would be supplied by Seed companies in Nigeria in addition to other agriculture inputs.
He added that under the arrangement, 2,062 metric tonnes of fertilizer worth about N290m (US$0.8m) would be made available by the fertilizer companies and 33,250 litres of crop protection products worth N54.6m (US$0.15m) would be committed to the project.
According to him, the pilot phase expects 8,750 metric tonnes of maize with a market value of US$2.06 million (N744m) and 2,000 metric tonnes of soybean worth US$0.57 million (N208m) would be produced.
The initiative has also projected farmers to rake in N425, 000 (US$1,178) and N2.26m (US$6,265) in revenues for maize and soybean respectively saving the country about US$2.8 million (N1bn) through import substitution.
“NIRSAL will deploy its credit risk guarantees on the financing tickets generated to provide comfort to financiers for loan disbursement.
“We will also deploy other robust risk management instruments including the Area Yield Index Insurance to safeguard yields at harvest, and other risk management instruments to guarantee adequate returns on investment,” he explained.
He said the NIRSAL team would be work with all key stakeholders to ensure requirements are duly captured and interests fairly represented in the agreements and contracts for implementation.
Abdulhameed added that NIRSAL was also in discussion with relevant institutions such as the Commodity Exchange, National Collateral Registry and insurance companies to ensure a price hedging structure was in place.
Abdulhameed said that the pilot scheme will strengthen NIRSAL’s objective of stimulating the agricultural industrialization process through increased production and processing.
“This is in no way a small feat as the ripple effects on economic growth, employment and standard of living would be immense,” he said.