Abuja, Nigeria — 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 Adesinathe, launched a partnership in which the parties expect to leverage up to $100 million in commercial lending for the country's agriculture sector.
The partnership, cemented through a Memorandum of Understanding signed today, will engage financial institutions, provide technical assistance, explore new financial products and establish a staff exchange program to encourage the growth of the agriculture sector in Nigeria.
"Most importantly, it is not a partnership for partnerships' sake," said Administrator Shah 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."
Since 1999, USAID's Development Credit Authority has mobilized nearly $3 billion in private financing through local lenders in 70 countries --helping first-time borrows 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 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.