T he Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL) has signed a Memorandum of Understanding (MoU) with Ecobank on a N70billion portfolio commitment from the bank to Agribusiness projects initiated and de-risked by NIRSAL.
The facility will be drawn down in series, with the MoU effectively kicking off an initial N15billion agribusiness financing provision by Ecobank.
A statement from NIRSAL raeds: “The commitment by Ecobank is the latest fruit of NIRSAL’s focus on breaking the jinx of poor investment in agribusiness by the financial sector by providing banks with strong incentives such as risk-sharing, technical assistance and innovative insurance.
“The attraction for Ecobank, and indeed other commercial banks who have recently made portfolio commitments to NIRSAL-supported agribusiness projects are anchored on NIRSAL’s Mapping-to-Markets (M2M) strategy, conceived to de-risk and make operations in commodity value chains more efficient through optimised primary production in a closed financing loop.”
Announcing the partnership after a business meeting with the management of Ecobank, the Managing Director/CEO, NIRSAL Plc, Aliyu Abdulhameed, said: “Ecobank’s onboarding demonstrates the growing acceptance of the Central Bank of Nigeria’s proposition of NIRSAL as an innovative mechanism targeted at de-risking lending to the agricultural sector and providing a safe climate for highly profitable private sector investments.
“This MoU signing marks the beginning of a collaboration between NIRSAL and Ecobank on NIRSAL’s agri-business initiatives and the development of products that will support lending to actors in the agricultural value chain in conformity with Ecobank’s risk acceptance criteria and credit process.
“With Ecobank’s commitment of a N70billion portfolio to NIRSAL’s agribusiness initiatives, the bank and NIRSAL would jointly select and develop projects that will meet the financing needs of actors in NIRSAL’s focal commodity value chains.”
According to Abdulhameed, NIRSAL’s focus on commodity value chains, otherwise known as the 5-4-3-2-1 commodities, include five Industrial Commodities – maize, soybean, wheat, cassava and cotton; four Export Commodities – hibiscus, sesame, ginger and shea; three Consumer Commodities – rice, sweet potato and beans; two Controlled Environment Agriculture Commodities – fresh fruits and vegetables (FFV) and aquaculture; and integrated livestock commodity.
Under this agreement, and in line with its Mapping to Markets (M2M) strategy, NIRSAL will identify and refer structured projects to Ecobank to support the Bank’s deal origination and financing operations in agribusiness. On its part, Ecobank will finance the projects leveraging NIRSAL’s Credit Risk Guarantee (CRG) which is a further comfort for lenders to agriculture and agribusiness.
Also speaking at the ceremony, Managing […]