By Naomi Uzor
The Bank of Industry (BoI) and the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL), have signed a Memorandum of Understanding to help cushion the economy following the current recession.
Speaking at the signing ceremony, the Managing Director, NIRSAL, Mr. Aliyu Abdulhameed, said for agric to work and contribute its quota to economic growth and guarantee decent incomes for farmers, it has to be properly linked to industry. “Unfortunately for us, the linkages between agriculture and industry are weak and this reduces the ability of both sectors to contribute to economic growth. “For instance the supply of agricultural inputs (fertilizer, seeds, agro-chemicals, farm tools and processing equipment) by industry, needed to increase agricultural productivity, are low in relation to effective demand” he said.
He disclosed that NIRSAL’s key objective under this partnership is to provide the Agricultural Promotion Policy (The Green Alternative) of the Federal Government with practical solutions for activating the potential of agriculture to ignite pro-poor growth, job creation and food security by facilitating private sector finance into agricultural production. To achieve this, according to him, the thrust of their efforts will be to package, de-risk and enable the flow of affordable financing of agricultural projects within the priority crop and livestock subsectors under the APP. He said “This we will do by bridging the competitiveness gap with the rest of the world in agriculture and agro-industry. It is this high level of competitiveness that will attract sustainable commercial and private finance to Nigeria’s agricultural economy”
“In reality, the key lies in: Raising agricultural productivity so that agricultural prices can fall without hurting the incomes of the poor, Improving the business environment for formal manufacturing as it invests, creates jobs, and grows faster and, Improving the efficiency of informal MSMEs so that the sector can increase value addition and job creation, thereby providing better opportunities for agricultural output to find attractive new mark” he stated.
The Acting Director of BoI, Waheed Olagunju, said the price Nigerians are paying for loosing track of its agricultural sector is the recession it is going through presently, adding that, before Nigeria found oil, agriculture was the major driver of the economy.
He noted that the MoU will boost import substitution, boost job creation, stimulate inclusive growth and realise the key objectives of the Agricultural Promotion Policy (APP) of the Buhari administration.
He disclosed that the historic collaboration between the two agencies will for the first time make possible the extension of BoI’s credit facilities to primary producers generally and smallholder farmers in particular whether they are in crop, livestock or fishery sub sector.
“ This is made possible on the strength of NIRSAL’s credit guarantees, Its risk sharing framework aids its value chain-fixing mandate which when combined, will enable the BoI to lend confidently into complete, end to end agricultural value chains while at the same time protecting its balance sheet” he said.
The partnership, he stressed, is important because it will leverage the multi-billion naira balance sheet of the BoI to make loans and credit available at very low interest rates to commercially viable agricultural projects that have been packaged, de-risked and linked to structural markets by NIRSAL.