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Three commercial lenders, including Stanbic IBTC, Union and Sterling banks on Tuesday committed some N4.5 billion to a Mapping-to-Markets (M2M) strategy of the Nigeria Incentive-based Risk Sharing System for Agricultural lending (NIRSAL) which targets to fix the Maize and
Soybean value chains in the country.
While Stanbic committed N2bn, Sterling and Union Banks brought in N1.5bn and N1bn respectively announced at the end of the NIRSAL preliminary technical session/roundtable engagement with stakeholders for the M2M project in Abuja.
NIRSAL will deploy its Credit Risk Guarantees on the financing tickets generated to provide comfort to financiers for loan disbursements.
Aliyu Abdulhameed, MD/CEO, NIRSAL said the commitments are for a pilot scheme to be run in Benue, Niger and Ekiti states, but will be scaled up to other states which show interest in helping their poor farmers grow.
Abdulhameed said the project is expected to save the country about N1bn through import substitution and possibly help each of the participating maize and soybean farmers generate up to N425, 000 and N2.26m respectively.
NIRSAL will also deploy other robust risk management instruments including the Area Yield Index Insurance to safeguard yields at harvest, boots-on-ground Project Monitoring, Reporting and Remediation Office (PMRO) personnel in the 3 states and other risk management instruments to guarantee adequate returns on investment as and when due.
He said following several deliberations, they have been able to extract significant commitments to be executed in the 2019 wet Season.
These include: 3,750 Hectares of brown-field farmland pledged by Benue, Niger and Ekiti states; N4.5 billion pledged in available funding to smallholder farmers by Stanbic, Union Bank and Sterling Bank under the M2M initiative; 3,750 farmers to be supported across these three states with 107.5 Metric Tonnes of seeds worth approximately N65.5 million expected to be supplied by Seed companies.
According to him, 2,062 Metric Tonnes of fertilizer worth about N290 million will be made available by the fertilizer companies, 33,250 liters of Crop Protection Products worth N54.6 million have already been committed; 8,750 Metric Tonnes of maize with a market value of
N744 million and 2000 metric tonnes of Soybean worth N208 million will be produced and off taken under this pilot phase.
At the event, downstream actors also committed to off-take the maize and soybean produced.
Abdulhameed reiterated their strong believe that the M2M strategy will lead to the unlocking of immense potentials across all agriculture value chains, the agriculture finance value chain and other agribusiness support sectors in Nigeria.
Under the scheme, NIRSAL will facilitate the signing and implementation of long-term supply contracts/off-take trade agreements addressing pricing, quality, delivery and payment terms, etc. between farmers agro geo-cooperatives and the downstream market off takers.
It will also ensure the signing and implementation of long-term supply and/or fee-for-service contracts between farmers agro geo-cooperatives and input suppliers, other upstream service providers for land clearing, irrigation, equipment leasing, tractorisation, mechanized
harvest, etc. as well as other service providers along the value chain.
“This is in no way a small feat as the ripple effects on economic growth, employment and standard of living would be immense. This is the type of positive impact that NIRSAL was established to create, and we are determined to make it happen,” he stated.
“We are keen to roll this strategy out for 15 value chains across the nation and we are confident it would turn around the fortunes of Nigeria’s millions of smallholder farmers and indeed all related actors across sectors,” he said.
He said with the CBN current drive to limit exposures of banks to Treasury Bills window, NIRSAL is making concerted effort to create highly de-risked agri-business investment environment as an alternative for bank lending.
He assured that the NIRSAL team will be in touch with all key stakeholders to ensure requirements are duly captured and interests fairly represented in the agreements and contracts for implementation.
Oluwasegun Agrigbede, Regional Agric Finance, Abuja and North Central, Sterling Bank said they have been in partnership with NIRSAL before now in different projects particularly through the Anchor Borrowers Programme but now they want to begin to lend to, particularly the
small holder farmers directly from their balance sheet.
“We have decided to work with NIRSAL on the laudable M2M project to development Nigeria’s agribusiness on the whole,” he stated.
“With NIRSAL support, we are ready to commit more to the agriculture sector beyond the 10% threshold for banks.”
The Registrar, National Collateral Registry, Mohammed Mainasara, said the Registry was in the arrangement to reduce the risks associated with banks’ lending.
He said the Registry would also ensure that farmers are able to get access to credit secured with movable assets such as farmlands, and farm equipment among others.
Onyinye Nwachukwu, Abuja