The Nigeria Incentive-Based Risk Sharing Agricultural Lending (NIRSAL) has guaranteed up to 224 projects for farmers worth N53 billion in the last 2 and half years. NIRSAL is an initiative of the Central Bank of Nigeria (CBN), the Bankers Committee (BC) and the Federal Ministry of Agriculture & Rural Development. It provides guarantee in form of Credit Risk Guarantee (CRG) as a comfort for the Banks to lend and also incentivize farmers through provision of Interest Drawback Program (IDP) to be paid quarterly based on the agricultural project.
This Guarantee ranges from 30 to 75% depending on the Agricultural value chain involved. IDP also ranges from 20 to 40% depending on the category. Huge amounts were guaranteed to borrowers in different agricultural value chain, especially those engaged in poultry farming. The initiative was aimed at boosting food security and reducing import bill in the country by serving as middlemen between farmers and the banks and as such issue credit-risk guarantees to the commercial banks. It is a form of collateral which can encourage the bank to lend money to farmers through their farming associations provided that the project is viable and if the borrower successfully pays back the loan then NIRSAL issues him an interest-drawback support.