Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and Union Bank of Nigeria Plc on Friday launched a N10 billion agribusiness financing scheme aimed at expanding existing investments in agriculture as the Federal Government strives to diversify the economy.
Speaking at the event, the Managing Director of NIRSAL, Mr. Aliyu Abdulhameed said the deal will create massive employment, guarantee food security and generate foreign exchange via exports.
He said various arms of agriculture provide excellent investment opportunities for the government, individuals and corporate bodies.
Abdulhameed said: “There are several agriculture value chains that this N10 billion can make flourish. We can acquire 830 brand new tractors, generate 330,000 direct jobs and 1.5 million indirect jobs and cultivate 300,000 hectares of land.
“We have 10 categories of agriculture that includes have ruminants farming, export crops, plantations like cocoa and rubber, poultry, etc. We have 30 commodities in all.
“Our role in NIRSAL is to de-risk the entire transaction and ensure those enjoying the loan from Union Bank have the capacity to pay back. We look at various factors before giving out the loan.
“More financing will come and this launch is part of NIRSAL’s mandate to make banks put more money into agriculture. We have implemented risk management framework in the agriculture value chain.
We have risk management tools and we keep our eyes on all the projects to ensure success. That is a huge off the backs of the banks. The Union Bank’s N10bn loan will benefit agriculture mechanisation, primary production, input supply, logistics, processing, storage and post storage handling”, he explained.
In his remarks at the event, the Group Managing Director of Union Bank Plc, Mr Emeka Emuwa said the coming of NIRSAL into the agriculture business was a soothing development because, in the past, lending to the sector was a tortuous experience since banks could not effectively monitor farmers’ investments and gauge the risks.
“You could not see what you were investing in and it made funding the greatest challenge of the agricultural sector in Nigeria. Banks were reluctant to invest in the sector. But now, NIRSAL has come to shine more light on it. Commercial banks and NIRSAL have roles in the agriculture value chain and that sector holds the highest percentage of Africa’s labour force at 65 per cent.
“In Nigeria, agriculture holds 50 per cent of the employment. It was responsible for 24 per cent of all contributions to our GDP in 2016. That means it’s a major plank of in the success of the Economic Recovery and Growth Plan (ERGP). To fully diversify our economy, agriculture must play a vital role.
“Our focus is market expansion and to help curb post harvest losses. We also want to support small holder farmers to access needed markets. We’ve 180 million people in Nigeria. We have to create opportunities to feed ourselves”, Emuwa explained.
Also speaking at the launch, the Managing Director of Development of Nigeria (DBN), Tony Okpanachi, described the deal as vital.
“When we say we are diversifying the economy, it simply means increasing the contributions of agriculture to the economy. And by that, it means increase the funding of agriculture. “DBN is a wholesale bank. We’ve been planning on how to impact the agric sector. We will work with NIRSAL and provide funding. We need to bring more financial institutions onboard”, he stated