Washington — The Nigerian and U.S. governments have partnered to increase private financing for Nigerian agriculture.
A new U.S.-Nigeria agreement signed January 17 in Abuja, Nigeria, is expected to leverage up to $100 million in commercial lending for Nigeria's agriculture sector.
In a ceremony at the Central Bank of Nigeria, U.S. Agency for International Development (USAID) Administrator Rajiv Shah, Nigerian Central Bank Governor Mallam Sanusi Lamido Sanusi and Nigeria's Federal Ministry of Agriculture and Rural Development, represented by the Minister Akinwumi Adesina, launched the partnership.
"Most importantly, it is not a partnership for partnership's sake," Shah said at the ceremony in Abuja. "These are true market linkages that will drive growth, deliver profits and expand opportunities for poorer and marginalized communities around the country."
To cement the partnership, the officials signed a memorandum of understanding that will engage financial institutions, provide technical assistance, explore new financial products and establish a staff exchange program to encourage growth in Nigeria's agriculture sector.
Since 1999, USAID's Development Credit Authority has mobilized nearly $3 billion in private financing through local lenders in 70 countries -- helping first-time borrowers access vital credit.
In Nigeria, USAID has partnered with six Nigerian banks to provide up to $34 million in guaranteed financing for health, agriculture, energy and housing.
USAID is a U.S. government agency that provides economic, development and humanitarian assistance around the world in support of U.S. foreign policy goals. 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 Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), founded by the Central Bank of Nigeria (CBN), 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 plans to become a stand-alone 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 Jonathan'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 potential. The ATA is expected to increase the income of Nigerian farmers, as well as Nigeria's food security, by making an additional 20 million metric tons of key food staples available on the local market.