The Nigerian House of Representatives has called on the Central Bank of Nigeria (CBN) to increase agricultural lending to farmers by $3 billion. This initiative aims to enhance food production and support the agricultural sector’s growth. Stay updated on the latest developments.
The House of Representatives has urged the Central Bank of Nigeria (CBN) to tackle under-financing in agriculture by allocating an extra $3 billion to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).
The Green Chamber expressed the opinion that the struggling economy, widespread poverty, and growing hunger across the nation can be attributed to reduced agricultural productivity. This decline has been caused by low capital investment and inadequate funding for agricultural production.
In light of this situation, it called on the central bank to guarantee that 50 percent of loans offered to Smallholder Farmers (SHF) are channeled through Microfinance Institutions (MFIs), Farmer Cooperatives, and value chain commodity associations at an interest rate ranging from 7.5% to 10.5%.
The House also urged the CBN to raise agricultural lending by banks from the current 1.4 percent to 7 percent of total lending over the next five years.
READ ALSO: Impending Merger as Central Bank of Nigeria Increases Capital Requirements for Banks
The House passed the resolution after Hon. Uchenna Okonkwo introduced a motion during Tuesday’s plenary session.
While presenting the motion, the lawmaker reminded that in 2011, the CBN introduced and established NIRSAL as a comprehensive $500 million public-private initiative aimed at defining, measuring, pricing, and sharing agribusiness credit risk.
Okonkwo stated that NIRSAL aims to improve agricultural and financial value chains by encouraging effective practices in agriculture financing, loan usage, and repayment. This approach is intended to lower the risks associated with lending in the agricultural sector.
He voiced his concern over the agricultural sector’s recent slow growth and underperformance, even though it represents 40 percent of the country’s Gross Domestic Product (GDP) and offers more than 60 percent of employment. Despite its vast potential, it is not achieving expected results.
He stated that he is convinced there must be a reversal of the current trend by addressing the issue of under-financing in agricultural value chains. This can be achieved by providing NIRSAL with an additional $3 billion to lend to actors within these chains in Nigeria.
As a result, the House instructed the Committees on Banking Regulations, Agricultural Production and Services, Nutrition and Food Security, and Finance to oversee compliance and provide feedback within four weeks for additional legislative measures.
