House Urges CBN to Increase Agricultural Lending to Farmers By $3bn

In a recent session, the House of Representatives in Nigeria took a significant step by urging the Central Bank of Nigeria (CBN) to address the issue of under-financing in the agricultural value chain. The lawmakers called for an additional $3 billion allocation to the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL). This resolution emerged from a motion presented by Hon. Uchenna Okonkwo during Tuesday’s plenary.

During the discussion, Okonkwo highlighted the critical state of Nigeria’s economy, marked by widespread poverty and rising hunger. He attributed these challenges to declining agricultural productivity, which he noted stems from insufficient investment and funding in the sector. Reflecting on past initiatives, he reminded his colleagues that NIRSAL was launched by the CBN in 2011 as a $500 million public-private partnership designed to assess and mitigate agribusiness credit risks.

“The primary goal of NIRSAL is to enhance both agricultural and financial value chains by promoting sound practices in financing and loan management, thereby lowering the risks associated with agricultural lending,” Okonkwo explained.

Despite agriculture representing 40% of Nigeria’s Gross Domestic Product (GDP) and providing over 60% of employment, Okonkwo expressed concern over its recent stagnation and underperformance. “To reverse this trend, we must confront the challenge of under-financing,” he asserted.

The House’s resolution also includes a directive to the CBN to ramp up agricultural lending by banks from the current 1.4% to 7% of total lending over the next five years. Additionally, they emphasized that 50% of this lending should be directed towards Small Holder Farmers (SHF) through Microfinance Institutions (MFIs), farmer cooperatives, and commodity associations, with proposed interest rates ranging from 7.5% to 10.5%.

To ensure compliance, the House has tasked various committees to oversee the implementation and submit a progress report within four weeks for further legislative action.