…Lawmakers Urge CBN To Cut Interest On Farm Loans To 7.5%
The House of Representatives has advised the Central Bank of Nigeria (CBN) to provide an additional $3bn to the Nigeria Incentive-Based Risk Sharing for Agricultural Lending (NIRSAL).
The lawmakers said the fund would be used to finance agricultural lending amidst the country’s food security challenges.
The member representing Idemili North/Idemili South Federal Constituency, Anambra State, Mr Uchenna Okonkwo, made the call in a motion raised during the plenary session.
He said that in 2011, NIRSAL was funded with $500m to address issues limiting agribusiness by sharing credit risk.
Okonkwo argued that NIRSAL needs additional funding as it has not fully harnessed its potential.
The plenary was titled “Repositioning the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and De-risking Agribusiness in Nigeria”.
Okonkwo said, “There is a need to address the challenge of underfinancing agricultural value chains by providing NIRSAL with an additional $3bn for lending to agricultural value chain actors in Nigeria.
“The agricultural sector which accounts for 40 per cent of the nation’s Gross Domestic Product and provides for over 60 per cent of employment, has experienced slower growth recently and is underperforming despite enormous potential.”
The lawmaker further proposed a motion to reduce banks’ interest rates for agricultural lending to between 7.5 and 10.5 per cent respectively.
Members at the plenary also urged the CBN to increase agricultural lending by banks from 1.4 to 7 per cent of total lending within the next five years.
The lawmakers also mandated the CBN to lend to smallholder farmers through micro-finance institutions, farmer cooperatives, and value chain commodity associations at an interest rate of 7.5 to 10.5 per cent.
They tasked the Committees on Banking Regulations and Agricultural Production and Services, Nutrition and Food Security, and Finance were tasked to monitor compliance in a month.