In a bid to ensure that Nigeria earns substantial foreign exchange from cocoa – its flagship export crop and impact farmers livelihoods, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL plc) has provided ADT Russet Limited with a 50 percent Credit Risk Guarantee (CRG) on a working capital facility of N1.15 billion from Keystone Bank for cocoa export.
Apart from absorbing 50 percent of the risk exposure in the event of loan delinquency, NIRSAL is also providing efficient monitoring of the project, which is aimed at boosting ADT Russet’s export volume to 4,000MT yearly.
Through the ADT Russet support, NIRSAL is creating a stronger market for smallholder cocoa farmers and positively impacting their livelihoods.
“We are happy to yet again demonstrate our willingness and capability to support agro-allied companies across the country to grow their businesses, engage smallholder farmers, and earn foreign exchange for the Nigerian economy,” said Aliyu Abdulhameed, managing director/CEO, NIRSAL, said during a tour of ADT Russet’s facility in Lagos recently.
Abdulhameed states that NIRSAL has provided similar support to another cocoa processing and exporting company in Ondo State – South-west Nigeria, saying the 50 percent CRG for ADT Russet is just one of the 748 projects NIRSAL has guaranteed across Nigeria.
“We have guaranteed projects to the tune of about $648million in the last five years and all the projects are performing with an NPL of less than one percent,” he says, explaining that beyond cocoa, NIRSAL operations cover 18 commodities across crop, livestock, poultry, and fishery sub-sectors.
The managing director says NIRSAL covers production, input supply, processing, logistics, warehousing, industrial market, and export market across the value chain in the various commodities.
A Special Purpose Vehicle (SPV) that was set up only in December 2019 by Arma Dei Trading Limited, now ADT Russet, has leveraged NIRSAL support to ship over 1,600MT of commodities to international markets, surpassing the numbers of its parent company, which has been in existence for far longer.
Charles Eteri, managing director, ADT Russet, commends NIRSAL for its role in supporting serious-minded business firms whose operations are contributing to Nigeria’s quest for economic growth and diversification.
According to Etesi, his foray into agro exports has been successful, and the potentials for growth owing to NIRSAL’s innovative support is enormous.
He is glad about NIRSAL’s value chain approach to agribusiness financing, pledging to contribute to the sustenance of the cocoa value chain by dealing fairly with the smallholder farmers who supply his inventory.
Also, John Chukwu, divisional head, Keystone Bank, states that deposit money banks do not need to be coerced into financing agriculture, insisting that structured value chains and de-risked projects would naturally, and on their merit, attract any profit-seeking business entity.
He adds that where there is a strong intention to support national priorities, like in Keystone Bank, de-risked and structured agribusiness projects become an even more compelling business proposition.
The tripartite relationship between NIRSAL, ADT Russet, and Keystone Bank is part of the growing outcomes of NIRSAL’s high-level engagements with deposit money banks, merchant banks, Finance Houses, MDAs of government, and local and international Development Finance Institutions (DFIs), wooing them into an agriculture and agribusiness space that is witnessing paradigmatic changes on account of NIRSAL’s work.
More than 70 percent of the world’s cocoa beans use for production by large chocolate producers in North America and Europe to make their sweet goods come from West Africa and Nigeria is the third-largest grower of the crop in the region.