Scheme launched for better access to finance for Nigerian farmers
Nigeria's central bank has introduced a €380 million incentive scheme to develop access to finance for farmers.Nigeria's central bank has introduced a €380 million incentive scheme to develop access to finance for farmers.
The Nirsal (Nigerian Incentive-based Risk Sharing System for Agricultural Lending) project was launched in November 2011 and includes a training programme for bankers, technical assistance and a risk sharing programme.
Loans are guaranteed by the Central Bank and supported by experts. If banks lend to a small farmer, the Central Bank will share the risk up to 80 percent of the first losses, up to 12.5 percent of their portfolio.
"Although agriculture represents 42 percent of Nigeria's gross domestic product, only 1.4 percent of bank loans are granted to this sector. Banks do not want to lend because of the perceived risks and lack of knowledge of this sector," said Central Bank Governor Sanusi Lamido Sanusi in an interview on May 14th with Jeune Afrique.
He added that the country could reach a double-digit growth by developing agriculture and by allowing farmers to access credit.
Nigeria's agricultural sector has performed well over the past two years, with an estimated growth rate in 2010 exceeding six percent.
According to African Economic Outlook, it reflects the government's effort to address protracted issues of inadequate credit and high interest rates in agricultural lending through the Commercial Agricultural Credit Scheme.
In 2009/10, the government made 200 billion naira (€989.2 million) available at low interest rates to farmers.