On 16 September 2016, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) signed a MoU with the Nigerian state-owned Bank of Industry. 



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Nigeria Incentive-Based Risk Sharing System for Agricultural Lending. English. 2017. NIRSAL Teams Up With BOI To Boost Agricultural Processing And Value Addition.

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On 16 September 2016, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) signed a MoU with the Bank of Industry. 


The core scope of this MoU is for these two institutions to establish a scheme which would enable them to boost the local Nigerian agriculture sector through:

a) enhancing the rates of job creation and import substitution at a local level and

b) contributing towards the realization of the key objectives of the National Agricultural Promotion Policy i.e. a Policy which core objectives are to ensure that the local agriculture industry does meet the domestic food requirements as well as is able to export high-level quality output in foreign markets.

 Consequently, the parties that are designated to benefit from this scheme are :

  • primary producers and smallholder farmers operating in the crop, livestock or fishery subsectors;
  • agro-input suppliers specialising in fertilizers, seeds, crop protection chemicals, fish & livestock feed;
  • agricultural mechanisation service providers 

Therefore, the highlighted scheme embedded in this MoU is aimed to function according to the following principles : 

  • Bank of Industry is set to provide loans to agricultural projects which NIRSAL as an institution mandated to fix the local agriculture value chain has identified to be impactful and sustainable for loan provision purposes. Although no specific details are provided concerning the terms under which these loans will be granted, the official statements do indicate that the loans will be provided under very low-interest rates as well as their credit approval process will be 50% faster than the standard one predominating in the country. 
  • NIRSAL is to provide credit guarantees for all the agricultural project loans that are to be granted by the Bank of Industry. The credit guarantees that are to be provided by NISRAL amount up to 75% of the total value per each granted loan, and are part of its  USD 300 million worth Risk Sharing Facility. 



NIRSAL is a state-owned Nigerian institution designed with the scope of ensuring the existence of affordable financing schemes to all players along the agricultural value chain in Nigeria. NIRSAL has several schemes or facilities embedded in its institution: a) Risk-sharing Facility, b)Insurance Facility, c)Technical Assistance Facility, d)Holistic Bank Rating Mechanism and e)Bank Incentives Mechanism. The Risk-sharing Facility (USD 300 million worth) is a credit guarantee-based mechanism under which NIRSAL does share the potential losses that commercial banks might incur in the process of lending to local agriculture beneficiaries. Specifically, via the Risk Sharing Facility, NIRSAL aims to encourage commercial banks to provide loans to local agriculture players via de-risking their loan provision investments through the credit guarantees it provides. The Insurance Facility (USD 30 million), on the other hand, does aim to optimize the insurance infrastructure available to local players in the industry of agriculture via : a) expanding the coverage of existing products provided by the Nigerian Agricultural Insurance Corporation and b) by piloting and scaling new products, such as weather index insurance, pest and disease insurance, life insurance, yield based as well as price index insurance. The Technical Assistance Facility (USD 60 million) is a mechanism of NIRSAL which aims to: a) provide banking institutions with the expertise and knowledge they would need in order to lend sustainably to the local agriculture sector; b) provide agricultural players with the necessary expertise to use the loans that they acquire more effectively (and therefore generate better quality output). Furthermore, the Holistic Bank Rating Mechanism (USD 10 million) aims to provide a rating for banking institutions on the criteria of the effectiveness of their agricultural lending as well as their overall social impact. Lastly, the Bank Incentives Mechanism (USD100 Million) provides further incentives (primarily cash-based) for Banks which have a high rating under the Holistic Bank Rating Mechanism -- in order to boost their lending to the national agriculture sector of Nigeria. 

 Bank of Industry is a state-owned Nigerian industrial bank created in the fiscal year 2001.


The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.