NIRSAL – The Nigeria Incentive-based Risk Sharing system for Agricultural Lending

NIRSAL – The Nigeria Incentive-based Risk Sharing system for Agricultural Lending

There is a general belief and misconception that Banks and other financial service providers shy away from lending to the Agric sector because it is a very risky sector. Banks in turn demand for tangible security to secure all lending. Farmers in turn find it difficult to approach banks for loan because they do not have the type of Security banks require.

Consequently farmers are left to the whims and caprices of the money lenders in the villages who charge interest rates as high as 100%. The farmers have no alternative but to take loan from the money lenders and they repay, otherwise, their farm produce will be seized or confiscated and disposed of in order to recoup the loan taken by the farmer.

In 1977, the Central Bank of Nigeria established the Agric Credit Guarantee Scheme Fund (ACGSF). All banks were to lend to farmers under the ACGSF. Banks that lent to farmers had 75% of amount in default guaranteed. However, lending to farmers under the ACGSF did not achieve the desired result of massive outflow of funds to the agricultural sector.

Agriculture is perceived by banks to be very risky due to unstable weather, disease outbreak and other factors beyond the control of man. The struggle to lend to the sector is still on.

In order increase flow of funds to develop the agric sector along the agric value chain, the Central Bank of Nigeria (CBN) came up with a new innovative mechanism targeted at de-risking lending to the agricultural sector. This is the Nigeria Incentive-based Risk-sharing System for Agricultural Lending (NIRSAL). The NIRSAL policy is designed to provide “the singular transformational and one bullet solution” to break the seeming jinx in agricultural lending and development in Nigeria. In order to come up with a workable policy, the Central Bank of Nigeria in August 2010 engaged the services of the Alliance for Green Revolution in Africa (AGRA) to develop NIRSAL.


NIRSAL is an approach that tackles both the agricultural value chains and the agricultural financing value chain.

The goal of NIRSAL is to catalyse and trigger the agricultural industrialization process in Nigeria through

1.    Increased production on the farm

2.    Processing of harvested products


The desired goal is to boost economic activity and earnings across the value chain.



Author Bio


Mrs. Yemisi Akibu ( nee Awokoya) is the Chief Executive Officer of Belvyna Global, an agricultural consultancy service firm based in Lagos, Nigeria She is a former Team Member of the Agricultural Department of Union Bank of Nigeria Plc, one of Nigeria's first generation banks. She holds a B.Sc degree in Agricultural Economics from the University of Ibadan, Nigeria and a Masters degree in National Development and Project Planning from the University of Bradford, West Yorkshire, United Kingdom. She is passionate about the role agriculture plays in the social, economic, political development of a nation. She holds the view that one of the pillars of stability of a nation food security and this can only be achieved through the holistic development of the agricultural sector. She can be contacted via: or Remember, The Farmer Is King Enjoy my blog

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