Webinar on NIRSAL’s Credit Risk Guarantee Facilitates Dialogue on Improving Access to Agriculture Sector Finance in Nigeria

According to a recent survey conducted by the Feed the Future Nigeria Agribusiness Investment Activity, lack of credit guarantees is one of the main reasons many agriculture-focused micro, small and medium enterprises (MSMEs) in Nigeria are unable to access finance from financial institutions. Coupled with complex processes for assessing credit, commercial banks often perceive agribusinesses as high risk and therefore restrict opportunities for funding.

In 2013, through the Nigerian Central Bank, the Government of Nigeria introduced the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), an agency designed to help bridge the gap between agricultural value chains and agricultural financing. Through NIRSAL, banks are offered strong incentives and technical assistance to help ease lending challenges.

On September 29, 2022, the Activity hosted a webinar on “Leveraging the NIRSAL Credit Risk Guarantee (CRG) to Increase Lending to Nigerian Agribusinesses.” The webinar brought together over 100 stakeholders, including financial institutions, agribusinesses, agriculture-focused programs and the media, to explain the NIRSAL CRG and examine its successes and challenges to date.

In his presentation on the CRG, Tahir Raji, NIRSAL’s Principal Manager, CRG Operations and Portfolio Management, explained that the CRG is an instrument issued to protect financiers and investors from possible losses during financial or credit transactions through a risk-sharing arrangement where NIRSAL insures the lender or investor of the principal and accrued interest up to 75 percent on loans obtained. He also noted that the scheme protects against bad debt through its project Monitoring, Reporting and Remediation Office (PMRO), reassuring financiers and investors and encouraging them to feel confident about lending to the agriculture sector.

Raji explained that NIRSAL also offers an incentive to borrowers with records of timely repayment in order to help reduce the burden of interest payments over time through the Interest Draw Back (IDB). He stated that the IDB “helps to induce the timely repayment of loans and enables agribusinesses to increase their profit margins.”

In the panel discussion that followed, three panelists — Olushola Obikanye, Sterling Bank’s Group Head of Agriculture, Wole Oshin, Stanbic IBTC Bank’s Head of Agribusiness and Solid Minerals, and Debo Abodunrin, CEO of Truvis Agro Services Limited — lauded the importance of the CRG while also highlighting ways to strengthen NIRSAL’s effectiveness in facilitating lending to agribusinesses, such as by improving the efficiency, consistency and cost of the process.

Describing his bank’s experience with the CRG, Obikanye noted that the unpredictability and inconsistency of payments and the high cost of monitoring and evaluation can make the CRG too expensive to access. Oshin and Abodunrin echoed these concerns and suggested ways to improve the synergy between NIRSAL and financial institutions, encouraging banks to actively market the CRG to their clients.

Comments and questions from attendees further highlighted the importance of strengthening lending mechanisms like the CRG in order to stimulate the flow of finance and investment to Nigeria’s agriculture sector. Through its efforts to expand access to capital and facilitate greater agricultural lending, the Feed the Future Nigeria Agribusiness Investment Activity will continue to deepen conversations with NIRSAL, and where needed, provide technical assistance that can contribute to improvements in efficiency and process for the agency.



We stimulate economic growth and improve livelihoods by cultivating entrepreneurship.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store