New Telegraph

CBN: De-risking famers’ investment via NIRSAL

As part of efforts by the Central Bank ot Nigeria (CBN) to secure agriculture investments from ruins, it established an independent organ–NIRSAL–to de–risk agriculture and facilitate agric business. ABDULWAHAB ISA examines efforts by the agency to secure farmers against losses

Central bank’s interventions in agriculture sector and its value chain are mouthful. Without those financial aid, comprising cash and supply of essential seedlings, and other logistical supports, agriculture won’t be where it’s today. CBN’s interventions upscale agriculture production, and by extension elevates Nigeria to a self-reliant nation.

Had the bank remained aloof and insensitive to what was happening to the agriculture sector, thus opting for only banking supervision, the country would have been begging for food by now. The current administration at the helm of affairs has saved what would have been a dire situation in agriculture.

A quick review of CBN’s support to agriculture is sufficient for record purposes. In the 70s, the bank birthed what in that era remain the largest funding scheme- Agricultural Credit Guarantee Scheme Fund (ACGSF). In a span of forty- three years, ACGSF guaranteed a cumulative loan of 1,190,970 valued at N122.632 billion to farmers. In 2020 alone, ACGSF guaranteed a total of 30,267 loans valued at N4.32 billion.

The scheme’s scope has been widened to fund all agriculture value chains. Situating the wonders of Anchor Borrowers’ Programme (ABP) in rice, maize and cassava production, the billion-naira finance and seedlings supply, one gets a clearer picture of the bank interventions.

The support to the cotton production, poultry, Palm oil, one can’t but appreciate CBN’s interventions in agriculture. Instructively, the bank’s legendary intervention is in the de-risking of agriculture losses for the farmers. CBN’s establishment of the Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL) is agriculture’s ultimate game changer.

A $500million non-bank financial institution wholly-owned by the apex bank, NIRSAL is created to redefine, dimension, measure, re-price and share agribusinessrelated credit risks in Nigeria. Conceived by the CBN, NIRSAL was established in collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD) and Nigerian Bankers’ Committee in 2013. .

De-risking agric investment

CBN’s effort in tackling myriad challenges in the agriculture value chain is demonstrated in the setting of NIRSAL Plc. In 2020 alone, the agency facilitated over N30 billion from banks into agriculture value by 2020. NIRSAL Managing Director/ CEO, Aliyu Abulhameed, at a recent media parley, confirmed the figure the organisation influenced into the agriculture value chain. For instance, Abdulhameed said the organisation facilitated over N148 billion in finance and investments for agriculture and agribusiness during the period. It aggregated over 3,000 agro geocooperatives with 500,000 farmers on nearly 800,000 hectares of land and enrolled 1.4 million persons onto innovative insurance products designed by NIRSAL in collaboration with a consortium of agricultural insurance underwriters.

“We have also been up to some high-level advocacy. To curb the dismal levels of post-harvest losses that Nigeria suffers, and create efficient routes for commodity movement and storage, we are engaging with and supporting the Federal Ministry of Industry, Trade and Investment in the development of a policy on Secured Agricultural Commodity Transport and Storage Corridors (SATS-C). “While pursuing our mandate that translates to positively impacting Nigeria’s economy, we have been building a world class corporate entity too.

In the past year, we further improved NIRSAL’s structure and systems, maintained compliance with the International Financial Reporting Standards and successfully implemented the Balanced Scorecard performance management approach to tap the best from our talented employees,” he said.

The greatest burden of farmers, mostly small holder farmers is lack of access to insurance products. This has led to huge losses on the part of small holder farmers with no insurance firm to indemnify their losses. NIRSAL Plc in collaboration with other stakeholders developed insurance products for 1,476,289 smallholder farmers under its purview.

The agric insurance will be executed through the development of insurance products like Hybrid Multi-Peril Crop Indemnity- Index Insurance product- HM-II. NIRSAL’s Abdulhameed, who unfolded the plan last year at the launch of the Hybrid Multi-Peril Crop Indemnity-Index Insurance product- HM-II in Abuja, harped on smallholder farmers and the increase in the number of insurance companies that underwrite agricultural risks. According to Abdulhameed, in developing agric insurance products, NIRSAL collaborated with both public and private sector underwriters.

He listed stakeholders involved in working out insurance policies for small holder farmers as National Insurance Commission (NAICOM), whose responsibility it is to develop “an index-based insurance productthe NIRSAL Area Yield Index Insurance product (AYII), which guarantees the income of the smallholder farmer by covering expected yield.” AYII , NIRSAL boss said, had been piloted during the 2017 wet season farming covering 17,000 farmers and 10,000 hectares with a harvest value of ₦3 billion.

The following year- 2018, NIRSAL developed the NIRSAL Comprehensive Index Insurance product (NCII). While AYII covers just yield risk, NCII covers yield risk, market price risk, and life insurance. With regards to increasing the number of insurance companies that would underwrite agricultural risk, Aliyu said: “NIRSAL has been able to crowd in private insurance companies into the Agric insurance space via the formation of a consortium of four insurance companies which has now grown to 10 insurance companies- including Royal Exchange- in the space of three years.” Collaboration Abdulhameed position, CBN’s Director, Development Finance, Yusuf Yila, said CBN adopted NIRSAL Area Yield Insurance (AYII) products and looked forward to deploying the HM-II.

Managing Director/Chief Executive, Royal Exchange General Insurance Company, Benjamin Agili, stated that by partnering with NIRSAL, “we have been able to develop an innovative agricultural insurance productthe Hybrid Index Insurance – for the insurance market in Nigeria. Mr. Sunday Thomas, Commissioner for Insurance, stated that in 2017 the management of NIRSAL met with the management of NAICOM to address the urgent need for implementation of Index- Based Agric Insurances to be offered by insurance companies licensed by the commission. According to him, “the commission granted “no Objection” to Royal Exchange General lInsurance Company Ltd to introduce Multi-Peril Crop Insurance and Weather Index Insurance products in the Nigerian Insurance market.

Furthermore, he noted that in order to support the Federal Government’s efforts in the promotion of agriculture and economic diversification, partnerships such as the one between NAICOM, NIRSAL PLC and REGIChe described as visionary- have become inevitable.

Balancing gender

At the heart of CBN’s intervention in the agriculture sector is all gender inclusivity. Infact, women in agriculture are being encouraged by the bank, a path NIRSAL is toeing. In adherence to the principles of all-inclusive growth, NIRSAL Plc empowered 475 female farmers in Uyo for cassava production during the 2020 wet season farming.

In addition, all 478 hectares of land will be mechanised throughout the planting season to enhance yields and profits and eliminate the drudgery of farming with crude implements. Furthermore, members of the Uyo Women AGC were penciled down to receive finance through the Central Bank of Nigeria’s (CBN) Anchor Borrowers’ Programme (ABP) for which NIRSAL Plc is playing a critical role as a Participating Financial Institution (PFI) in ensuring that the CBN’s and indeed the Federal Government’s developmental and economic diversification goals are met. NIRSAL Plc flagged-off the distribution of inputs to the farmers during a ceremony held at Anang People Primary School, Obio Ndot, Oruk Anam LGA of Akwa Ibom State where Mrs. Theresa Thompson Akpan, the President of the Uyo Women AGC, described the CBN’s support through NIRSAL as a milestone in enhancing cassava production in the state.

She tasked farmers under the Uyo Women AGC to embrace NRSAL Plc’s approach of farming as a business in order to move from peasant farming to sustainable agribusiness. She thanked NIRSAL Plc for harnessing the female farmers’ potential and for its continued support of agribusiness in Akwa Ibom State. Speaking through Helen Akula, the Head of NIRSAL Plc’s Akwa Ibom State Project Monitoring, Reporting and Remediation Office (PMRO), Abdulhameed, the organization noted that NIRSAL Plc’s support of Uyo Women AGC would not only empower the 475 farmers of the AGC but will create jobs for many families in the community, thereby achieving NIRSAL Plc’s mission of forging partnerships between finance and agriculture while achieving food security, creating jobs and spurring economic growth.

Last line

The establishment of NIRSAL, an agriculture de-risking agency, is the apex bank’s joker for agriculture value chain.

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