Uche Usim, Abuja
Three state governments and six financial institutions have signed on the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending’s (NIRSAL) rating and incentive pillars in their efforts to help stimulate the flow of finance and investment into the agribusiness sector.
The Managing Director NIRSAL, Abdulhameed Aliyu said it activated the rating facility as part of its broad mandate to fix broken agricultural value chains and assess the performance of key stakeholders such as financial institutions and state governments on the effectiveness of their agricultural policies and programmes.
According to him, the first phase of this ratings exercise is targeted at banks, insurance companies and state governments.
“The pilot phase of the exercise is expected to commence on May 13, 2019, with six financial Institutions – Stanbic Bank IBTC, Ecobank, Sterling Bank, AIICO Insurance, AXA Mansard and LAPO Microfinance Banks – which have expressed interest in participation.
“At least three state governments will also be assessed during this pilot phase. The results of the pilot phase will be used to design a comprehensive roll-out of the Ratings Programme for all interested stakeholders.
“The Rating and Incentive pillars represent the last two of the five pillars of NIRSAL to be activated. The first three are the risk sharing facility, the technical assistance facility and the insurance facility. These five strategic pillars provide the funding basis for NIRSAL’s de-risking operations and interventions across the agricultural value chain”, he explained.
To successfully activate its Rating and incentive pillars, NIRSAL has developed a scoring methodology for these three clusters to enable independent assessment of their agricultural activities. These scoring methodologies have been validated by the relevant stakeholders through a consultation workshop held in November 2018. The consultation programme was well attended by participants from Access Bank, WEMA Bank, Sterling Bank, First Bank, LAPO Microfinance Bank, Leadway Assurance Company Limited, AXA Mansard Insurance Plc, AIICO Insurance Plc, Royal Exchange General Insurance Company Ltd, Nigerian Agricultural Insurance Corporation (NAIC), Industrial and General Insurance Company Plc, Bauchi State Ministry of Agriculture, Ekiti State Ministry of Agriculture amongst others.
The scoring methodology to be deployed for Banks rates them according to their organizational commitment to agriculture, quality of their agricultural portfolio and recognises smallholder farmers inclusion and innovation in their agric lending activities.
Insurance Companies will be rated based on the innovative agricultural insurance products developed, customer acquisition and satisfaction and timely processing of claims.
The rating of sub-national Governments will assess the ease of doing agribusiness in the respective States with a view to improving access to critical factors of production and providing the enabling and regulatory environment necessary for agribusinesses to thrive.
The results of the rating exercise will also be used to develop a comprehensive Incentives programme which will reward innovation and encourage healthy competition among Financial Institutions and State Governments to support the agribusiness sector and encourage smallholder farmers’ inclusion.