The United States Agency for International Development (USAID) is supporting the Federal Government’s agriculture programme with $3billion, about N480bn agric funding, reports NaijaAgroNet.
Governor, Central Bank of Nigeria (CBN), Mr. Lamido Sanusi, made this known in the company of Federal Minister of Agriculture and Rural Development (FMARD), Dr. Akinwumi Adesina, who signed on behalf of the Federal Government, whereas the USAID Administrator, Dr. Rajiv Shah, endorsed the dotted lines for the agency.
NaijaAgroNet reports that the agreement, which was signed at the CBN headquarters in Abuja, showed that it will enable the parties to use co-guaranties, joint technical assistance, combined training and workshops for local banks and agriculturally-linked enterprises to encourage the growth of the agriculture sector in Nigeria.
Also speaking, Shah said under the agreement, the US would immediately provide guarantee of up to $100m in commercial lending to Nigerian banks. Stressing that the move will help increase private financing to the sector as well as reduce banks’ apathy to agricultural lending.
“We are very proud of this partnership agreement because we know that in all of the promise and success that the future holds for Nigeria; agriculture nearly 70 per cent of small scale farmers lack access to financing. Because of this partnership, hundreds of millions of dollars will be made available so that farmers can access and improve their production system and their processing operations,” he said.
Equally commenting, Adesina said the grant would help to address some of the issues affecting lending to the sector by banks, noting that the high interest rates, persistently decline in the quantum of lending to the sector and risk of default.
“What this facility is going to do, and I really commend the Central Bank governor, is to reduce the risk of lending by banks,” he said.
Pointing out that they were thrilled at the $8bn investment commitment into this sector in one year and were also excited by the fact that of the N3bn that was lent last year to seeds and fertilizer companies, the default rate was zero per cent.
“So, on this facility, the central bank will put out risk sharing instruments, which will leverage the excess liquidity from the commercial banks. The total amount that we are looking at is $3bn overtime,” he said.
Adesina said, the amount that would be facilitated under the Nigerian Incentive-based Risk Sharing for Agriculture Lending had about four components.
The components are to reduce the risk faced by banks, provide technical assistance to banks, improve the agriculture value chain and provide insurance cover.
As said, Adesina noted that the grant is an endorsement of the fact that the Central Bank and the banking community recognise there is a revolution on the way in Nigeria in agriculture.
“They are ready to put significant financing behind it,” he said.
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