Reps urge CBN to increase agricultural lending to farmers by $3bn

The House of Representatives has called on the Central Bank of Nigeria (CBN) to address under-financing in the agricultural sector by providing the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) with an additional $3 billion.

The Green Chamber expressed the view that the ailing economy, widespread impoverishment, and increasing hunger in the nation are due to decreased agricultural productivity, which has been triggered by low capital investment and insufficient funding of agricultural production.

Against this backdrop, it urged the apex bank to ensure that 50 per cent of lending to Smallholder Farmers (SHF) is facilitated through Microfinance Institutions (MFIs), Farmer Cooperatives, and value chain commodity associations at an interest rate of 7.5–10.5 per cent.

The House also called on the CBN to increase agricultural lending by banks from the current 1.4 per cent to 7 per cent of total lending within the next five years.

The resolution of the House followed the adoption of a motion moved at the plenary on Tuesday by Hon. Uchenna Okonkwo.

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Presenting the motion, 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 objective of NIRSAL is to enhance agricultural value and financial value chains by promoting good practices in agricultural financing, loan utilization, and repayment, thus reducing the risk of agricultural lending.

He expressed concern that the agricultural sector, which accounts for 40 per cent of the nation’s Gross Domestic Product (GDP) and provides over 60 per cent of employment, has experienced slower growth recently and is underperforming despite its enormous potential.

He said: “Convinced that to reverse the trend, there is a need to tackle the challenge of under-financing of agricultural value chains by providing NIRSAL with an additional $3 billion for lending to agricultural value chain actors in Nigeria.”

The House, therefore, mandated the Committees on Banking Regulations, Agricultural Production and Services, Nutrition and Food Security, and Finance to monitor compliance and report back within four weeks for further legislative action.