House of Representatives Urges CBN to Provide Additional $3bn for Agricultural Financing

The House of Representatives has called on the Central Bank of Nigeria (CBN) to tackle under-financing in the agricultural value chain by providing the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) an additional $3 billion.

The resolution of the House followed the adoption of a motion moved at plenary on Tuesday by Hon. Uchenna Okonkwo.

Presenting the motion, Okonkwo pointed out that the ailing economy of Nigeria, severe impoverishment across the nation, as well as the increase in hunger were due to decreased agricultural productivity triggered by low capital investment and insufficient funding of agricultural production.

The lawmaker recalled that in 2011, CBN launched and incorporated NIRSAL as a dynamic, holistic $500 million public-private initiative to define, measure, price, and share agribusiness credit risk.

Okonkwo explained that the objective of NIRSAL was to enhance agricultural value and financial value chains, by promoting good practices in agricultural financing, loan utilisation, and repayment, thus reducing the risk of agricultural lending.

He expressed worry that the agricultural sector, which accounted for 40 per cent of the country’s Gross Domestic Product (GDP) and provided over 60 per cent of employment, had experienced slower growth recently and was underperforming, despite its enormous potential.

Okonkwo said, “Convinced that to reverse the trend, there is a need to tackle the challenge of under-financing of agricultural value chains by providing NIRSAL with additional $3 billion for lending to agricultural value chain actors in Nigeria.”

The House, therefore, called on CBN to increase agricultural lending by banks from 1.4 – 7 per cent of total lending within the next five years.

It added that the apex bank should ensure 50 per cent of lending to Small Holder Farmers (SHF) through Microfinance Institutions (MFIs), farmer cooperatives, and the value chain commodity association at an interest rate of 7.5–10.5 per cent.

The Green Chamber mandated the Committees on Banking Regulations and Agricultural Production and Services, Nutrition and Food Security, and Finance to monitor compliance and report within four weeks for further legislative action.

Adedayo Akinwale

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