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THISOAY • WeDNESDAY. JUNE 13. 2012

BANKING

BUSI NE'3SWORLD

NIRSAL: Unlocking Nigeria's Agricultural Potentials Obinl1H Chima writes on the Nigerian Incentive-based Risk Sharing Agricultural Lendinl;' which was created to encourage agricultural finan.cing \'CI the v~ar5, the unlruoptnng performance of th4 1\ igenlln agri\.-ultunl sector. in 1e.~O.(jts cot Ir ootD'l torountry'stotall1'\'ET'Iuehilwbeen • ~ 'UrcE' of ron«'m 10 lCua:eslVe government I Ill" Met led to the 06tion of Vilnous tnlna1\\'('5 allned ill It long thr agric ~or out of the doklrums. Unfortunatel)' de "lie Vilrlous poIi.:;e thai ....'ft\' creilled in lhP past. IhI! sed.,r II Kl reflliltned pl'OStr.llte and had dl5COUfilged invt'5lur.-. But as I~ wo Id population explode and the threats to · global rood 'II'CUIII" helghtel. attention is gradually tunung more and mott' I, a,,-kuTture_ Countne and Il'\'ititulions halT continued 10 P ll't 1 for large-scole agncultural traru;fonnation as pari ur eff" rtl' hI achieve Ulcreased growth lind reduced nHClI povt"I1) In foci,. rustu rbf j by the development, ~ Nigerian BankeI:5' Conuni"~ ill cd lfmlClion WlU, the Cenlnll Bank of Nigeriiil (caN) ~\ed, rol'lC)'.nned al rqlOSiborullg Iheagt-nJUural pmduction irllhI · lountry The agric deveII p'TleI'lI progratlvne tagged Nigeoan ~"l!­ based Risk !hrij ,S Agricultural l.e\ding (NtRSAL) - an idea tWIt has bftn pl-'l'105ed 10 drive agricultural revolution in lhe country According tu tJ~ CB", the Nigenan agricuItl1re seder st.mr.i5 """"' on ~ll'I opportunity and in order 10 Cil.ptu~ thai pro5p«t. a n!\-"<M tinuy approach is required b agricultural value ch.:uns . ar,rirulture financing by commerciaJ banks.. NIRSAL is i\rI ulCI\71th~ fnI!dwusm targeted al de-nsktng lending 10 tht.o a rkullural !i!'ct0l. The CBN deqibed NlRSALas a widl" rangmg. ammtious prog:ramrne "'hotl" ~ fully align with President Jonathan's admimstrabm, a mmitl1'Olt to itChieving food 5al.Iritv. ~ job m-ation and ~~rty rtductk'" m Nigeria.

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A G RA Report A repctrt b ¥ It I" AlJiancr for Gn.'en ReI.'olulion in AfriI:a (AGRA). roundI"d by. former Sa:n.>tary Genernl of the United Nations. Mr Kaf Arullln, showed lhal Agriculture 1ICOOUnts for roughly oi l p! r telll of Cf05II Domestic Product (GOP) in Nigeria and SJ d r renl of tht· Cf'{lI'lOITUOI.J[y acIi,,~ population In 1M rounh.... l:i;1 A5 ~~ak-d b}' the report showed U\IIt if the Nigeri;m ;;o~ ~mmenl b 5incene In Its fIO"erty re'duction campaign. it .lb<I .llItely has to fix agrICUlture. The ~ aM , r.howoo that the cwntry has 7tJ pf!f" cent of its populal 'OJl n,;htlv m rural are.!> and about iO per CUlt .1>0 Jivlng in ~ than QnI" doUar a 11 attributed the 7tJ per CUlt popilia 0'\ "gUll! ,till Ir\- ing on one dollar a day to the fact th..~t I e N~n awkulnaal !Il*ctOf is still al lhr 51'bsis~ It>v It stilted trul SUlCe 2IXJJ, agriculture has been lhe s~est growtng sector, growing roughly al about 5. 1 per cenlper l' nnwn. AGRA saad "'N ~ repre:!BtlS a maaoax;m of agncultwa.l

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opponunitles. AWKUlture plays a huge role U\ the Historically, a gn'Iwth SKtof', agriculture has siowed 0\.1!J the last deQde and today II" wdupofOilioing. Absunl1y, N'tgeria relies hea\iIy an Impoi1S 10 fud its people. Yet agocul~.still oflm tmml'tl.'Ie orporturuties fm" By transforming the sectu'. Nigma can prodOO!! mo~ food to IU!d lto;ell, Joy.-er IhI! cost of food imp<'ft5. and e1Il'I1 become a major food exporter and Ii bmtdbasket for the whok- of West Afnca. .. AgriculIU~ an general!! additional growth and employment.. We: etima~ thai by increasing yjeId and acreage, prtXIuction OIn grow Ii nUl.9l'iYe 160 per cent by 2030, rising from S99 billion m 2010 to S256 billion in 2030. Already In ZOOI-2OO7, it iiccuunlro for -"i1 per cent of job creation in Nigeria. In 11; short, agricul\urt' harbours Ihe key growth reserves 10 drive Nigeria's economic greatness." It however insisted thai thl" country mlcll first I3dcle major cM.llenges such M low productivity, Aying that the avenge farmer produces less Ulan 75 percent of household food requirements. The report listro other challengtos to melude: mfnistruc.. lure - roads, energy, 5Ungt' are insuflicienL Research and Devekopmenl (R&O), a key factor in the mii1sforma.bon of the new agricultunll powerhouse, all shown in the case of Brazil n«d 10 be ii1trnsifled In Nigeria .. Agncullural chains In the country are broken, rrussing oul vital links for ins~, between the proce!l'iOB and seed. manuf'acturl'!s Estimates put dle natiO'l', ~~!Il'ed derJwld at O\.i!'i'" 1 million metnc tons a year; yet. the muntry pmdures only II ~ 8.000 metric tons," il added.

growth.

NIRSAl', Role The CBN lasl ",eel. R'SIlItcd il:! reso!\'e to guarantee 75 per emt loons pnwidI"d by IleposII Money B.-utks to film'lf!B in the 36 states of the kderation and the Federal Capital TerritoI'}

nle Nigerian a~culture sector Stands before an enonnous opportunity and in order to caphire that prospect,. a revolutioJ!lll'Y approach is required for agnCultural value chains and agriculture financing by commercial banks.

(FCT) as part of efforts to transform the agricultural ~. packaged under the NIRSAL Head 01 NIRSAL rro,ect imrlemeftlabon Off~ under the: ~I F'1rli\r'ICt! Dl"partml"nt.. CBN. ML Jude lhonwanne, ~ stated that the guarantee would bI" issued .J'f thP NlRSAL to the fanners in the 5t111e!i and fCT through COTIlIllI"fdaI banb and other fif"lilnCial institutions. He had l!q!1ained: "NIRSAL mobilises finanang for Nigerian agro-busmess by UlIlng credit guaranlees to add~ the risk oT default.. NIRSAL 15: <II flexible ftnanong tool designed to change the behaviour of fiMnciiil institutions "11 COVI"B all oops and liv~ock <IIctl\'ities IJl Nigena. while dnving imp~ investment outcoml"S and job aealion. It is also building on a legacy o( prevtOUl! CON mt(!fVenhons in agricuhure tha I has helped crea te thousands of jobs. " According to him. the prograrnml" was designed 10 create acass to fU\ll.nce by integrating end-to-end agriculture value chains such as input producers, fannen, agm deam, agro processors and industrial mnnufacturets with agricultural financing yalue chams - loan product de'{eiopmml, CIftIit dlStnbution, loan OflgmaUon. II'W\3gmg and pricing ftX' risk. llnd Ioiln diSbwsement. '"lbe mtegration 15 dn\'eI1 by NlRSA.L's 5 pillaJs, partKularly the Risk Sharing Pillar and the TeduticitJ AssiS~ pillars such as nslc sharing facility (N45 billion), insurilJU facility (N..5 billion), tedmk:a1 as5istance facility, agricultur;1ol bank rating !Cherne (N15 billion), and bank inttntive mechanism (N15 billion)," he noted The kMn guarantee is bein8

Way Fonnrd The Mtnister of SlAte for FCT, O\ie( OliI,urnoke Akmpd~. sakl that the NlRSA.L should be encowage:I.. pointmg out that the prognunme W<1:5 fundamentaJ to the!iUC'CeSB of the Fmeral Go\'emment's Agricultural Transfonnational Agenda (ATA). ~ to him.. the programme "'as established to IIddre!B the grey areas inhibllmg agncultural growth in Nigena. "NlRSAL under the ATA seeks 10 address aU the technica.I, adllW'li.str.l tjv~ and financial needs of the fanners along the selected agricultura l val u~ chain commodities In which !he COWltry has comparative ad,'antage; he added. On her part.. 'ht· Croup Mnnaging OiJtoctor / QUe{ Executtve ~ Unim Bank d N"1gt'ria PIc. MB. Funke 05ib0tIu. reo!I"ItJy called for concerloo efforts by banks to make agrirultural financtng altnctive and prorltable for investors by focusing on a hotistk YalUl" maUl. O!ibodu iJenlifted the benefits of the approach to include the producbon of in.pul / Olltpullmlcages. meeting the rEeds of industries, inhastructur"f' needs of stakeholders, among other.>. The Union Bank bog said ~ '"The value chain model wiD ~ inCI"eUe in per capita iocome. employment genention, rural development.. empowerment of citizens and well

informed barOOng

CU!ltome:rs ..


THISDAY, 13 JUNE, 2012