The House of Representatives has called on the Central Bank of Nigeria (CBN) to tackle under-financing in the agricultural chain by providing the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) with an additional $3 billion.
The House also called on the CBN to increase agricultural lending by banks from 1.4 – 7 per cent of total lending within the next five years.
It added that the apex bank should ensure 50 per cent of lending to Smallholder Farmers (SHF) through Microfinance Institutions (MFIs), Farmer Cooperatives, and the value chain commodity association at an interest rate of 7.5–10.5 per cent.
The resolution of the House followed the adoption of a motion moved at the plenary on Tuesday by Hon. Uchenna Okonkwo.
Moving the motion, the lawmaker pointed out that the ailing economy of Nigeria, severe impoverishment across the nation, as well as the increase in hunger was due to decreased agricultural productivity triggered by low capital investment and insufficient funding of agricultural production.
The lawmaker recalled that in 2011, the CBN launched and incorporated NIRSAL as a dynamic, holistic $500 million public-private initiative to define, measure, price, and share agribusiness credit risk.
Okonkwo explained that the objectives of NIRSAL is 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.
He expressed worry that the agricultural sector, which accounts for 40 per cent of the nations’ Gross Domestic Product (GDP) and provides for over 60 per cent of employment, has experienced slower growth recently and is underperforming despite enormous potential.
He said: “Convinced that to reverse the trend, there is a need to tackle the challenge of underfinancing of agricultural value chains by providing NIRSAL with additional 3 billion Dollars for lending to agricultural value chain actors in Nigeria.”
The Green Chamber also mandated the Committees on Banking Regulations and Agricultural Production and Services, Nutrition and Food Security, and Finance to monitor compliance and report within four weeks for further legislative actions.