On December 18, 2014 TOHFAN was one of the stakeholders invited by the Central Bank of Nigeria to NIRSAL stakeholders’ sensitisation meeting for the launch of its Guarantee Guidelines for Agricultural Mechanisation Financing. We at TOHFAN are working tirelessly to ensure we are a front runner in Agricultural Machinsation in Nigeria, As such we ensure that our presence and contribution are felt at forums that disscus issue that concerns our and the Agricultural sector.
NIRSAL plc as part of its effort to ensure efficient mechanization of agricultural services, issued the implementation version of its mechanization financing framework (NMFF) as the first step of its rollout plans. This version of the NMFF has features that provides strong incentives to encourage participation by all stakeholders. For instance, the credit risk guarantee levels for counterparties is now 75% of the face value of the loan while borrowers are incentivized to ensure timely loan repayment through a 40% interest rebate when they repay as and when due.
To get a better understanding of our participation it is necessary to understand the role of NIRSAL and what they do; The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL PLC). NIRSAL PLC is an initiative of the Central Bank of Nigeria (CBN), the Bankers Committee (BC) and the Federal Ministry of Agriculture & Rural Development (FMA&RD). Important design and structuring input into the initiative was provided by numerous stakeholders including farmer groups, deposit money banks (DMBs), Ministries, Departments and Agencies (MDAs), processors, civil society groups and financial services providers.
NIRSAL PLC is a non-bank financial institution (NBFI).
The mandate of NIRSAL PLC is to facilitate the flow of credit to agribusinesses and collaborate with Stakeholders to fix broken agricultural value chains in Nigeria. To be responsive to evolving market conditions, NIRSAL PLC will periodically hold meetings with key counterparties and stakeholders to discuss technical issues related to the optimal functioning of the guidelines.
NIRSAL is a Risk Sharing Fund designed to identify, redefine, measure, re-price and evolve strategies for the risks of lending to the Nigerian agriculture value chain. The Fund will create incentives and catalyze processes to encourage the growth of formal credit (direct and indirect) for the agriculture value chain, as a strategy for wealth creation among participants. NIRSAL PLC will use innovative risk management strategies, long term financing, promote job creation, and establish market participants operating within the country’s agribusiness sector and broader economy..