The Central Bank of Nigeria (CBN) on Monday in Abuja signed a Memorandum of Understanding (MoU) with the Alliance for a Green Revolution in Africa (AGRA), an Africa-based NGO.

The MoU is aimed at instituting an innovative mechanism to finance agriculture in the country.

Reports say that AGRA works to achieve a food secure and prosperous Africa through the promotion of rapid, sustainable agricultural growth, based on smallholder farmers.

It works in partnership with governments, agricultural research organisations, farmers and the private sector to sustainably improve the productivity and income of poor farmers in Africa.

Speaking at the signing ceremony, the CBN Governor, Mr. Lamido Sanusi, underscored the importance of empowering poor farmers in the country.

He described the MoU as a landmark agreement to develop a new innovative mechanism to help unlock financial value change to help serve the need of all farmers.

He said, “AGRA is coming to assist us to design a blueprint that will address the concerns of the banks; a blueprint for risk sharing and for incentives; “a blueprint for policies and for watching the other government agencies and that which will unlock financial value change in agriculture.”

He said that the major purpose of the MoU was to see how to address the concerns of the banks with regard to the risk of lending to primary small holders in agriculture.

He said the apex bank had been in discussion with AGRA for the past six months.

The governor expressed regret that, while the agricultural sector contributed 42 per cent of the Gross Domestic Product, it only benefitted one per cent of lending from the banks.

He said, “In Nigeria, agriculture accounts for over 40 per cent of the GDP, yet it receives only one per cent of total commercial bank loan.

“Unlocking access to bank financing for agriculture and developing risk sharing approaches are critical to stimulating innovations in agricultural lending and increasing food production.

“Twenty per cent increase in agricultural activity adds eight per cent to the GDP.”

Sanusi noted that when the total package of the MoU was designed, the CBN would deploy $500m for a new initiative known as the Nigeria Incentives-based Risk Sharing System for Agricultural Lending.

It would also leverage three million dollars from commercial banks into agriculture, he noted.

Also speaking, the AGRA President, Mr. Namanga Ngongi, described agriculture as a business and not a way of life.