The Public Accounts Committee of the House of Representatives has
applauded NIRSAL’s MD/CEO, Aliyu Abdulhameed for his efforts to position
the risk-management agency as a major driver of agricultural development
in Nigeria.
The commendation came during an engagement with NIRSAL’s Management to
clarify and share ideas on NIRSAL’s mandate, track record and
accomplishments.
Chairman of the Committee, Honourable Oluwole Oke, expressed his
satisfaction with the performance of NIRSAL’s Managing Director, adding
that NIRSAL had now found a friend in the form of the National Assembly.
Other committee members described Abdulhameed as a round peg in a round
hole and a man of undoubted capacity. They also congratulated NIRSAL for
its commendable performance in terms of agribusiness financing, noting
that other agencies should learn from NIRSAL’s rigorous processes of due
diligence.
In his remarks to the Committee, Abdulhameed gave members an in-depth
analysis context and rationale that informed the creation of NIRSAL, the
Corporation’s mandate and transformative achievements in Nigeria’s
agribusiness space.
He explained that prior to the creation of NIRSAL, financiers were
averse to lending to agriculture, citing perceived high risks in the
sector, especially in the upstream segment of the agricultural value
chain where primary production takes place, often referred to as the
“black hole” in agriculture.
In response to these concerns and as part of efforts to diversify
Nigeria’s economy from crude oil-dependence, the CBN formulated NIRSAL
to catalyse the flow of much-needed financing into Agriculture by
redefining, measuring, re-pricing and sharing agribusiness-related
credit risk with financiers.
Abdulhameed noted that the CBN, in its foresight, established NIRSAL as
a Public Liability Company registered under the Companies and Allied
Matters Act. This gave financial institutions more confidence and ease
to do business with NIRSAL as opposed to the limited transactions they
could enter into with public sector institutions and the legal
complexities therein.
In terms of NIRSAL’s mandate, Abdulhameed informed the Committee that
the agency is built on five broad pillars of Risk Sharing, Insurance,
Technical Assistance, Incentives and Rating. These strategic pillars
are geared towards increasing bank lending to the agricultural sector by
over 6% in the short to medium term, hence, bridging the gap between the
finance and agricultural sectors.
Principally, NIRSAL is facilitating finance to agriculture through its
Credit Risk Guarantee (CRG). Through the CRG, NIRSAL shares either 30%,
50%, or 75% of
agribusiness-related risk with financiers depending on the agricultural
value chain segment receiving finance.
Through the NIRSAL CRG, NIRSAL has attracted investment into
agribusiness and guaranteed 697 agribusiness loans worth
USD505.9Million, paid NGN1.274Billion Interest Draw Back to 271
obligors, creating over 400,000 direct jobs and impacting over 2,000,000
lives in the process.
In terms of insurance, NIRSAL has developed and launched the Area Yield
Index Insurance (AYII) product and protected up to NGN6.47Billion in
revenues of 35,492 farmers over 37,399 hectares of land with
NGN122Million paid out in compensation to farmers.
Furthermore, Abdulhameed pointed out that NIRSAL has facilitated the
granting of licenses to five insurance companies by the Nigerian
Agricultural Insurance Corporation (NAIC) to underwrite index-based
Agricultural insurance.
Leveraging on its Technical Assistance pillar, NIRSAL builds the
capacity of financiers and agricultural value chain operators on
agricultural lending and Good Agronomic Practices (GAP) respectively.
Accordingly, NIRSAL has trained 1,221 middle Management and Agric Desk
Officers of commercial banks and provided training on GAP to 700,000
farmers and 74 Extension Workers.
Continentally, NIRSAL has overseen the establishment of Risk Sharing
Facility (RSF) models for African Countries under the aegis of the
African Development Bank (AfDB), and recently, concluded the setup of
the Togo Incentive-Based Risk Sharing System for Agricultural Lending
(TIRSAL), known locally as Mécanisme Incitatif de Financement Agricole
Fondé sur le Partage de Risques (MIFA).
Other African countries have also sought NIRSAL’s guidance on how to set
up similar agribusiness risk-sharing sharing models. They include Ghana
and Benin among others.
The committee has also tasked NIRSAL on tackling the issue of
postharvest losses by strengthening commodity exchange systems in which
farmers can trade their commodities round-the-clock.
Coincidentally, NIRSAL recently partnered with Wema bank and Cellulant
for the development and deployment of a commodity financing model
designed to link smallholder farmers in the upstream segment of the
value chain to community-based produce aggregators, and commodity buyers
servicing the downstream segment.
Based on the success of the deliberation, the Committee has recommended
a workshop whereby NIRSAL will enlighten both the Senate and House of
Representatives who will, in turn, educate their constituents, and by
extension, all Nigerians, on NIRSAL’s operations for smallholder farmers
continued benefit and poverty alleviation.