By Gloria Ikibah
The House of Representatives has called on the Central Bank of Nigeria (CBN) to increase agricultural lending by banks in the country from 1.4 percent to 7 percent of total lending within the next five years, with 50 percent going to Smallholder Farmers (SHF) through Microfinance Institutions (MFIs), Farmer Cooperatives, and the value chain commodity association at an interest rate of 7.5 percent 10.5 percent.
This was sequel to a motion on “The Need To Reposition The Nigeria Incentive Based risk Sharing for Agricultural Lending (NIRSAL)” to ensure optima performance in boosting agriculture and food production in the country by Rep. Uchenna Harris Okonkwo, on Tuesday at plenary.
In his lead debate, Rep. Okonkwo said that Nigeria was ailing with severe impoverishment across the nation, as well as the increase in hunger as a result of decrease in agricultural productivity triggered by low capital investment and insufficient funding of agricultural production.
According to the lawmaker, in 2011, the CBN launched and incorporated the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) as a dynamic, holistic $500 million public-private initiative to define, measure, price, and share agribusiness credit risk.
He said that the objectives 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.
Okonkwo therefore is concerned that the agricultural sector, which accounts for 40 percent of the nations’ Gross Domestic Product (GDP) and provides for over 60 percent of employment, has experienced slower growth recently and is underperforming despite enormous potential.
He said if the trend must be reversed, there is 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 lawmaker also said there was the need to reduce banks break-even interest rates to agricultural value chain borrowers from 7.5–10.5%.