Leveraging Partnerships to Increase Lending to Nigeria’s Agriculture Sector

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NIRSAL and Feed the Future Nigeria Agribusiness Investment Activity teams engaging in dialogue at the agricultural co-guarantee instrument training.

In 2013, in collaboration with the Federal Ministry of Agriculture and Rural Development (FMARD) and the Nigerian Bankers’ Committee, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) was launched with the aim of stimulating the flow of affordable finance and investments into the agricultural sector by de-risking the agriculture and agribusiness finance value chains, building long-term capacity and institutionalizing incentives for agricultural lending through a $300 million Credit Risk Guarantee (CRG) fund.

Seeking to diversify their impact beyond the CRG, NIRSAL partnered with the USAID Feed the Future Nigeria Agribusiness Investment Activity to conduct a four-day training for 30 NIRSAL staff on agricultural co-guarantee instruments. Hosted from November 21–24, 2022, the training focused on facilitating partnerships with local and international guarantee companies to effectively manage co-guarantee instruments and establish a more effective risk-sharing model.

NIRSAL training participants discussing ideas during a brainstorm exercise.

The training featured Lagos-based consultants, Emmanuel Tarfa and Olubanji Samuel of Enzo Krypton and Company and Uganda-based Paulo Lusawata, who facilitated sessions on risk management, credit analysis, credit exposure, agri-finance product diversification and development, and co-guarantee concepts and best practices. The workshop concluded with a hands-on session where participants worked in groups to develop co-guarantee instruments and marketing strategies for promoting the instruments to financiers, investors and agribusinesses.

Recounting their training experience in the post evaluation assessment, participants expressed their satisfaction and commended the practical approach to the training, the interactions they had during the breakout and hands-on sessions, the facilitators’ training style and the transfer of knowledge that took place. “In the past, I was hesitant about developing a concept document for co-guarantee since it seemed like a cumbersome process. After participating in this hands-on training, I’ve found an efficient way of developing such documents and will apply this skill in the management of our CRG portfolio,” said Kayode Fashakin, who is deputy manager, Credit Risk Guarantee Operations and Portfolio.

Group photograph of NIRSAL training participants and facilitators with the Feed the Future Nigeria Agribusiness Investment Activity team.

Building on the success of this training, NIRSAL will partner with other credit guarantee companies to develop, pilot and roll-out a variety of additional co-guarantee instruments. Zainab Ibrahim, NIRSAL’s agricultural value chain finance and investment services manager, added that the concept notes for the co-guarantee instruments developed during the training will be presented to their management for approval and inclusion in their future operations. With that, they hope to expand their risk-sharing portfolio to reach more agribusiness micro, small and medium enterprises looking for funding.

Leveraging partnerships with co-guarantee companies to roll out inclusive funding instruments will enable NIRSAL to deepen its impact in facilitating lending for agribusinesses across Nigeria. Besides the CRG, additional co-guarantee instruments have the potential to facilitate improved relationships with the private sector and can provide a platform for knowledge sharing and learning. Onboarding new partners in managing co-guarantee instruments will certainly open new funding windows for agribusinesses and enable NIRSAL to leverage additional risk-sharing funds from the private sector beyond the $300 million CRG funds.

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