This resolution emerged from a motion introduced during the House plenary by Hon. Uchenna Okonkwo.
In his remarks, Okonkwo highlighted the challenges facing Nigeria's economy, including widespread poverty and increasing food insecurity, which he attributed to declining agricultural productivity.
He noted that these challenges stem from low capital investment and a lack of sufficient funding in the agricultural sector, which have significantly impeded its development.
In light of these issues, Hon. Okonkwo advocated for a substantial increase in financial support for the sector. “I am convinced that to reverse this trend, we must address the under-financing of agricultural value chains by providing NIRSAL with an additional $3 billion to support lending to agricultural value chain participants in Nigeria,” he stated.
“The pervasive poverty and rising hunger across the country are directly tied to diminished agricultural productivity,” Okonkwo emphasized, pointing out that inadequate funding has severely restricted the sector's capacity to realize its full potential.
Enhancing agribusiness
Hon. Okonkwo reminded attendees that in 2011, the CBN established NIRSAL as a public-private partnership aimed at mitigating agribusiness credit risk.
Originally set at $500 million, NIRSAL's main goal was to enhance the agricultural and financial value chains by fostering best practices in agricultural financing, loan usage, and repayment. This initiative was intended to lower the risk for financial institutions and stimulate increased lending to the agricultural sector.
NIRSAL aims to improve agricultural and financial value chains by advocating for best practices in agricultural financing, loan utilization, and repayment, as stated by Okonkwo.
He raised concerns regarding the agricultural sector, which, despite its significant potential, has seen sluggish growth due to insufficient financial backing. Okonkwo noted, “The sector is vital, contributing 40% to Nigeria’s Gross Domestic Product (GDP) and providing over 60% of the nation’s employment,” yet it has been underperforming in recent years.
“There is an urgent need to address the issue of inadequate financing within agricultural value chains,” Okonkwo emphasized. “Allocating an additional $3 billion to NIRSAL for lending to agricultural value chain participants is crucial to reversing this trend.”
Key recommendations - The House has resolved to:
“Encourage the Central Bank of Nigeria (CBN) to raise agricultural lending by banks from the current 1.4% to 7% of total lending over the next five years.
Ensure that 50% of agricultural loans are allocated to Small Holder Farmers (SHF) through Microfinance Institutions (MFIs), farmer cooperatives, and value chain commodity associations. These loans should be offered at interest rates ranging from 7.5% to 10.5%, making them more accessible for small-scale farmers.”
Additionally, the House has instructed the Committees on Banking Regulations, Agricultural Production and Services, Nutrition and Food Security, and Finance to oversee compliance with these directives. These committees are expected to report back to the House within four weeks for further legislative action.
The Central Bank of Nigeria has not yet responded to the House’s resolution regarding the additional funding for NIRSAL.