The Pan African Bank, Ecobank has signed a Memorandum of Understanding (MoU) with the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (NIRSAL) on a N70billion portfolio commitment from the bank to Agribusiness projects initiated and de-risked by NIRSAL.
The facility will be drawn down in series, with the MoU effectively kicking off an initial N15billion agribusiness financing provision by Ecobank.
According to NIRSAL: “The commitment by Ecobank is the latest fruit of NIRSAL’s focus on breaking the jinx of poor investment in agribusiness by the financial sector by providing banks with strong incentives such as risk-sharing, technical assistance and innovative insurance.
“The attraction for Ecobank, and indeed other commercial banks who have recently made portfolio commitments to NIRSAL-supported agribusiness projects are anchored on NIRSAL’s Mapping-to-Markets (M2M) strategy, conceived to de-risk and make operations in commodity value chains more efficient through optimised primary production in a closed financing loop.”
Commenting on the collaboration during a business meeting with the management of the bank,the Managing Director/CEO, NIRSAL Plc, Aliyu Abdulhameed, said: “Ecobank’s onboarding demonstrates the growing acceptance of the Central Bank of Nigeria’s proposition of NIRSAL as an innovative mechanism targeted at de-risking lending to the agricultural sector and providing a safe climate for highly profitable private sector investments.
“This MoU signing marks the beginning of a collaboration between NIRSAL and Ecobank on NIRSAL’s agri-business initiatives and the development of products that will support lending to actors in the agricultural value chain in conformity with Ecobank’s risk acceptance criteria and credit process.
“With Ecobank’s commitment of N70billion portfolio to NIRSAL’s agribusiness initiatives, the bank and NIRSAL would jointly select and develop projects that will meet the financing needs of actors in NIRSAL’s focal commodity value chains.”
According to Abdulhameed, NIRSAL’s focus on commodity value chains, otherwise known as the 5-4-3-2-1 commodities, include five Industrial Commodities – maize, soybean, wheat, cassava and cotton; four Export Commodities – hibiscus, sesame, ginger and shea; three Consumer Commodities – rice, sweet potato and beans; two Controlled Environment Agriculture Commodities – fresh fruits and vegetables (FFV) and aquaculture; and integrated livestock commodity.
Under this agreement, and in line with its Mapping to Markets (M2M) strategy, NIRSAL will identify and refer structured projects to Ecobank to support the Bank’s deal origination and financing operations in agribusiness. On its part, Ecobank will finance the projects leveraging NIRSAL’s Credit Risk Guarantee (CRG) which is a further comfort for lenders to agriculture and agribusiness.
Also commenting, Managing Director, Ecobank Nigeria Limited, Patrick Akinwuntan said the bank is actively promoting agriculture as a strategic initiative to support national development which is critical to the wellbeing of Nigerians.
According to him, Ecobank is committed to working with NIRSAL to open up the vast opportunities that abound in agriculture and to ensure citizens benefit ultimately.
Akinwuntan stated further that: “in Nigeria, Ecobank hopes to contribute positively to move the economy forward, creating employment for the teeming population through agriculture. We found a natural partner in NIRSAL as they have the requisite intellectual capacity to act as a meeting point for the stakeholders in the sector. The de-risking participation of NIRSAL gives us the will to provide these facilities at single-digit rates at a maximum of nine per cent to ensure that the users are able to make profits. When our customers make profits, we are also able to make profits. So, it is a win-win business for everyone.”