About NIRSAL

NIRSAL is designed with the objective of enabling the flow of affordable financing to all players along entire agricultural value chains. It reduces the risks of financing institutions while granting agricultural loans by building the capacities of both banks and value chain actors on good practices in agricultural financing, loans utilization and repayment.

About NIRSAL

The Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL) was launched in 2011 and incorporated in 2013 by the Central Bank of Nigeria (CBN) as a dynamic, holistic USD500 Million public-private initiative to define, measure, price and share agribusiness related credit risk.

NIRSAL operated as a project implementation office in Development Finance Department of the CBN until the appointment of its executive management team by the CBN on 23rd December 2015.

NIRSAL seeks to address the causes of low funding levels in the agriculture sector, including lack of understanding of the sector, perceived high risks, complex credit assessment processes/procedures, and high transaction costs.

Its approach goes beyond the use of Credit Risk Guarantee to:

Fixing the agricultural value chain, so that banks can lend to the sector with confidence; and
Encouraging banks to lend to the agricultural value chain by offering strong incentives and technical assistance.

To achieve this, NIRSAL has five pillars that are designed to 'de-risk' the agricultural financing value chain, build long term capabilities and institutionalize agricultural lending using its seed capital of USD 500 Million (USD0.5Billion).

The funds are allocated across NIRSAL's five pillars as follows:

Risk-sharing Facility (USD300 Million). NIRSAL uses this facility to address banks' perception of high-risks in the sector by sharing losses on agricultural loans.
Insurance Facility (USD30 Million). The facility's primary goal is to expand insurance products for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance etc.
Technical Assistance Facility (USD60 Million). NIRSAL uses this facility to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products.
Holistic Bank Rating Mechanism (USD10 Million). This mechanism is used by NIRSAL to rate banks based on two factors, the effectiveness of their agricultural lending and the social impact and makes them available for the public.
Bank Incentives Mechanism (USD100 Million). This mechanism offers winning banks in Pillar four, additional incentives to build their long-term capabilities to lend to agriculture. It will be in terms of cash awards.

Crop Value Chains as Pilots

NIRSAL has identified six pilot crop value chains based on existing crop production levels and potentials in six high-potential breadbasket areas. The crops are:

Tomatoes
Cotton
Maize
Soya beans
Rice
Cassava

Core NIRSAL Targets

NIRSAL has four concrete and transparent measures of success for the financial value chain:

Leveraging of NIRSAL fund to USD3 Billion to increase bank lending within ten years in order to increase bank's total lending to agriculture from the current 1.4 to 7 percent.
Increased lending to the "pooled" small farmer segment to 50 percent of total lending to agriculture. Typically, banks do not reach producers individually but through "pools" such as MFIs and cooperatives).
Increased lending to agricultural primary producers by 3.8 million in 2026 through pooling mechanisms such as value chains, MFIs and cooperatives.
Reduction of bank's break-even interest rate to borrowers from 14 to 7.5 - 10.5 percent.

Economic Benefits of NIRSAL

Generate higher income, GDP, foreign exchange earnings: They will also lead to increased income, GDP, foreign exchange earnings and the ability of the Central Bank of Nigeria to manage the value of local currency, lower food inflation and maintain monetary robust external reserves as well as monetary stability. In addition, the project will absolve the Bank of the need for endless and voluminous subsidies to the agricultural sector.
Strengthen the financial sector: NIRSAL will strengthen the Nigerian financial sector because it presents an opportunity for the banks to capture latent profits in agricultural lending, maintain long term human, institutional and cultural capacity for value chain financing capacity and enjoy lower loan origination and distribution costs.
Boost farmers and other agricultural producers: NIRSAL's interventions will benefit Agricultural producers via increased access to credit, enhanced adoption of better cultural and agronomic practices, use of improved inputs like seeds and fertilizers, increased productivity and profit, income, standards of living, job creation and poverty reduction.
Enhance food security and facilitate higher productivity: NIRSAL's interventions will lead to a stronger agricultural sector with six showcase value chains, enhanced food security, fewer imports, and higher productivity.
Fundamentally transform the Nigerian economy: Overall, NIRSAL will help to realize a stronger, more diversified, post-oil economy with additional agricultural GDP growth, higher employment, reduced expenditure on food imports, higher tax revenue from the agricultural sector, competitive exports and a more diversified economy.

Plot 1581 Tigris Crescent
Maitama District
Abuja 900221
Nigeria