The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) as a demonstration of its commitment to mechanising the agriculture sector, it has guaranteed over N85.5billion in loans along all segments of the value chain. It said while pre-upstream segment got N45.6billion, upstream segment and midstream segment got N19billion, and N20.9billion respectively.
Activities in these segments cover mechanisation, agricultural inputs, primary production, and processing.
About N1.76billion of the NIRSAL Credit Risk Guarantees (CRGs) issued were in mechanisation.
In addition to paying claims on CRGs that crystallised to financiers, NIRSAL has paid about N1billion as its Interest Drawback (IDB) IDB to borrowers.
A statement yesterday read: “A fundamental criterion is that every application must meet the terms of NIRSAL’s credit risk guarantees. These are components of governance to ensure a level playing field “NIRSAL is a catalyst that enables providers of finance and investment to lend to and invest in agribusinesses, leveraging on its Risk sharing Facility to deploy the NIRSAL CRG and risk management products, tools, techniques, methodologies and strategic partnerships.”
The CRG instrument is issued by NIRSAL to secure loans by up to 75 per cent of losses over the life of an underlying credit contract in the form of agribusiness related term loans, and/or debt instruments such as short, medium, and long-term notes.
The guarantee covers the credit risk of default on loan principal and the accrued interest and is purchased at one per cent fee (upfront payment) of the loan value and subsequent outstanding balances of the loan annually.
The purchase of a CRG also qualifies an underlying borrower, in principle, to access IDB- an interest rate rebate scheme that NIRSAL offers to borrowers whose facilities are in good standing.
Source: The Nation