USAID and Nigerian Government Partner to Increase Private Financing for Nigerian Agriculture (January 17, 2013)

January 17, 2013

From left - USAID Administrator Dr. Shah, CBN Governor Sanusi Lamido Sanusi, Minister of Agriculture Dr. Akinwunmi Adesina, and Minister of State for Agriculture Dr. Bukar Tijjani. Embassy photo by Sani Mohammed

USAID Administrator Dr. Shah (left) exchanging the MOU document with Agriculture Minister Dr. Adesina (right) as CBN Governor Sanusi Lamido Sanusi (middle) watches. Embassy photo by Sani Mohammed.

In a ceremony at the Central Bank of Nigeria on January 17, 2013, United States Agency for International Development (USAID) Administrator Dr. Rajiv Shah, Nigerian Central Bank Governor Mallam Sanusi Lamido Sanusi, and Nigeria’s Federal Ministry of Agriculture and Rural Development, represented by Honorable Minister Dr. Akinwumi Adesina, launched a groundbreaking partnership that will result in increased private financing for the country’s agriculture sector.  

The partnership, cemented through a Memorandum of Understanding (MOU) signed today, will enable the parties to use co-guarantees, joint technical assistance, combined training and workshops for local banks and agriculturally-linked enterprises, and other interventions to encourage the growth of the agriculture sector in Nigeria.  Through this partnership the parties expect to leverage up to US $100 million in commercial lending.

Partnership organizations:

USAID is a U.S. Government agency that provides economic, development, and humanitarian assistance around the world in support of the foreign policy goals of the United States.  USAID’s Development Credit Authority (DCA) works with investors, local financial institutions, and development organizations to design and deliver investment alternatives that unlock financing for entrepreneurs in the developing world. 

The Central Bank of Nigeria-founded Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) provides risk mitigation, financing, trading, and other strategic assistance to agribusinesses in Nigeria and has a capital base of $500 million. The Nigerian Government established NIRSAL to spur additional financing for agriculture lending, based on its experience with various credit guarantee programs, including USAID’s Development Credit Authority. NIRSAL is currently a project office within CBN’s Development Finance Department, but it planned to become a standalone legal entity in the future. 

The Federal Ministry of Agriculture and Rural Development has developed an Agricultural Transformation Agenda (ATA) that builds directly on President Goodluck Jonathon’s (economic) transformation agenda, as agriculture is an important sector of the economy through its employment, food security, foreign exchange earning/saving and poverty reduction potentials.  The ATA is expected to increase the income of Nigerian farmers and food security by making an additional 20 million metric tons of key food staples available on the local market.