How NIRSAL’s Mapping Will Unlock Financing for Agribusiness in Nigeria

The Nigeria Incentive Based Risk Sharing System for Agricultural Lending(NIRSAL) was established by the Central Bank of Nigeria to collaborate with all the players in the agricultural sector to fix the frictions in the agribusiness value chains and de risk it to unlock financing and investments. Despite this strategic intervention for Nigerian farmers, agriculture is still underfunded due to certain risks which have made banks not to dole out the funds to operators in the agro-value chain.

The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL Plc.) is a US$500million Non-Bank Financial Institution wholly-owned by the Central Bank of Nigeria (CBN) created to Redefine, Dimension, Measure, Re-Price and Share agribusiness-related credit risks in Nigeria.

Established in collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD) and Nigerian Bankers’ Committee in 2013, NIRSAL’s mandate is to stimulate the flow of affordable finance and investments into the agricultural sector by de-risking the agribusiness finance value chain, fixing agricultural value chains, building long-term capacity, and institutionalizing incentives for agricultural lending through its five (5) strategic pillars, namely: Risk Sharing, Insurance, Technical Assistance, Incentives and Rating.

NIRSAL has recently introduced Mapping To Market Concept which will redesign agricultural financing risk management and agribusiness models that take cognizance of the fact that the banks will only fund a sector that is secured, with controlled risk and structured. To redesign the Black Hole, i.e. Upstream Agricultural Sector, which has high risks making it unattractive for bank lending despite being the foundation that other components of the ecosystem are dependent on, NIRSAL has acquired advanced geospatial technologies such as Satellite Imaging Data to be supported by Unmanned Aerial System platforms. These tools offer the following benefits:

• Efficient for monitoring large swathes of farmland such as in the North East and North West region due to their land mass
• Identification of the most ecologically endowed areas for specific commodities
• Remote sensing of crop health status and aggregation of fragmented farmlands.

Lack of available and accurate data to support investments in agriculture in Nigeria is a bane to the value chain and the acquisition of these state of the art technology by NIRSAL will correct this anomaly.

Through its Mapping To Market redesign, NIRSAL will pre-sell smallholder farming Geo-cooperatives to finance. They are developed and mapped in sync with the natural ecologies of specific commodities with farmers who will be deepened with financial and technical capabilities to produce specific crops in large quantities to service the offtake market coordinated by NIRSAL in line with pre-agreed quantity, quality and price parameters.

This initiative will create thousands of large, integrated, bankable clusters of farmers with a minimum ticket of 250 farmers mapped to a 250Ha Geo-Cooperative to downstream markets under guaranteed offtake arrangements such as facilitation of working capital and asset financing for all key stakeholders in the specific commodity value chain. Mapping of these players to each other and the Geo-Cooperative tickets, domiciliation of all loan accounts with a financing bank or a consortium of banks and a near zero cash movement between the locked in parties to the transaction will deepen the agro space in Nigeria. Anchored by NIRSAL’s Credit Risk Guarantee supported by its Risk Management Tools, Techniques, Methodologies, Processes, Technical Assistance Facility and Global Partnerships, the inherent capabilities will provide a holistic monitoring mechanism for each project.

Nigeria’s agricultural industry will soon witness its golden moment courtesy of the Mapping To Market strategic intervention to fully unlock its potential for food security and economic prosperity.