Stanbic backs Nigerian ag through $140m partnership

Nigeria's government says it is looking at similar arrangements with other institutions to help prop up the country's farmers.

Old tractor on a farm in the Oudtshoorn region of the Western Cape in South Africa

Nigeria’s government says it is looking at similar arrangements with other institutions to help prop up the country’s farmers.

Nigeria’s farmers will soon have improved access to financing following a 50 billion naira ($138.5 million; €115.4 million) agreement signed by the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and Stanbic IBTC aimed at boosting agricultural productivity and modernization.

Stanbic, a subsidiary of South Africa’s Standard Bank, will make available an initial 10 billion naira for the 2017/18 dry and wet season, increasing the total amount gradually as certain milestones are achieved.

NIRSAL, which was founded in 2011 as a wholly-owned unit of Nigeria’s Central Bank, will provide credit guarantees to cover up to 75 percent of Stanbic’s loans, using its $300 million risk-sharing facility.

Projects eligible for the available funds will be NIRSAL-supported schemes in livestock, crops, mechanization, logistics and poultry.

In addition to facilitating farmers’ access to financing, the partnership also provides for technical assistance on best agricultural practices and access to inputs that NIRSAL will provide.

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The first 10 billion naira phase of the scheme is expected to create more than 92,000 direct jobs, cultivation of an additional 11,195 hectares of arable land and an increase in national food output by up to 50,580 metric tons in yield.

According to NIRSAL managing director Aliyu Abdulhameed, the agency is pursuing similar collaborations with other financial institutions to drive growth in the agricultural sector, contributing to the Nigerian government’s broader objective of achieving economic recovery.

To date, NIRSAL has facilitated a total of 64.4 billion naira in credit risk guarantees to the agricultural sector, it said in a statement.

The agricultural sector is Nigeria’s largest employer, providing jobs to 31 percent of the economically active population in 2007. Around 45 percent of the population is unemployed, according to the UN’s Food and Agriculture Organization.

However, the sector remained highly uncompetitive until 2011, with the country – Africa’s most populous – having to rely heavily on food imports. Between 2011 and 2014, drastic reforms were implemented, aimed at increasing production and attracting investments, which has led to job creation, a sharp increase in food production and a resultant reduction in food imports, according to the FAO.

Major crops produced are rice, cassava, yam, maize, sorghum, millet and groundnut.