The Nigeria Incentive-Based Risk-sharing System for Agricultural Lending (NIRSAL) has signed a memorandum of understanding (MoU) with Ecobank on a N70billion portfolio commitment for agribusiness projects.
NIRSAL’s Head of Corporate Communications, Anne Ihugba, who made this known in a statement on Thursday, said the fund would be disbursed to the agri-businesses initiated and de-risked by her organisation.
She said the facility would be drawn in series, with the MoU effectively starting an initial N15billion agribusiness financing provision by the bank.
According to her, the commitment by Ecobank is the latest outcome of NIRSAL’s focus on breaking the jinx of poor investment in agribusiness by the financial sector.
She said NIRSAL had been able to achieve that by providing banks with strong incentives such as risk-sharing, technical assistance and innovative insurance.
“The MoU is an offshoot of a meeting that took place between the two organisations on June 20, 2019 in which NIRSAL aroused Ecobank’s interest with its de-risked agribusiness model.
“It is believed that the attraction for Ecobank and indeed, other commercial banks which have recently made portfolio commitments to NIRSAL-supported agribusiness projects are anchored on NIRSAL’s Mapping-to-Markets (M2M) strategy.
“M2M was conceived to de-risk and make operations in commodity value chains more efficient through optimised primary production in a closed financing loop,” she said.
Announcing the partnership in Lagos after a business meeting with the management of Ecobank, Aliyu Abdulhameed, Managing Director and Chief Executive Officer of NIRSAL, commended the bank’s commitment to the programme.
According to him, it was a demonstration of the growing acceptance of the Central Bank of Nigeria’s proposition of NIRSAL.
Ihugba quoted Abdulhameed as saying that NIRSAL was an innovative mechanism targeted at de-risking lending to the agricultural sector and providing safe climate for highly profitable private sector investments.
“The MoU signing marks the beginning of a collaboration between NIRSAL and Ecobank on NIRSAL’s agri-business initiatives and the development of products that will support lending to actors in the agricultural value chain in conformity with Ecobank’s risk acceptance criteria and credit process.
“With Ecobank’s commitment of a N70billion portfolio to NIRSAL’s agribusiness initiatives, the bank and NIRSAL would jointly select and develop projects that will meet the financing needs of actors in NIRSAL’s focal commodity value chains,” he said.
Abulhameed listed NIRSAL’s focused commodity value chains, otherwise known as the 5-4-3-2-1 commodities, to include five industrial commodities – maize, soybean, wheat, cassava and cotton; and four export commodities – hibiscus, sesame, ginger and shea;
Others were three consumer commodities – rice, sweet potato and beans; two controlled environment agriculture commodities – fresh fruits and vegetables and aquaculture; and integrated livestock commodity.
“Under this agreement, and in line with its M2M strategy, NIRSAL will identify and refer structured projects to Ecobank to support the bank’s deal on origination and financing operations in agribusiness.
“On its part, Ecobank will finance the projects, leveraging on NIRSAL’s Credit Risk Guarantee (CRG) which is a further comfort for lenders to agriculture and agribusiness,” Abdulhameed said.
The Managing Director of Ecobank, Mr Patrick Akinwuntan, according to Ihugba, said the bank was actively promoting agriculture as a strategic initiative to support national development which was critical to the wellbeing of Nigerians.
Akinwuntan noted that the bank was committed to working with NIRSAL to open up the vast opportunities that abound in agriculture and to ensure that citizens benefited ultimately.
“The Federal Government has made it clear that investing in the agriculture sector is very critical for Nigeria to succeed, especially considering the natural endowment God has granted us in terms of population, land and weather.
“We have the opportunity to make agriculture the money spinner for Nigeria. What we are doing is to fulfil this policy direction of the Federal Government and the CBN.
“In Nigeria, Ecobank hopes to contribute positively to move the economy forward by creating employment for the teeming population through agriculture.
“We have found a natural partner in NIRSAL as they have the requisite intellectual capacity to act as a meeting point for the stakeholders in the sector.
“The de-risking participation of NIRSAL gives us the will to provide these facilities at single-digit rates at a maximum of nine per cent to ensure that the users are able to make profits.
“When our customers make profits, we are also able to make profits. So, it is a win-win business for everyone,” Akinwuntan said
