Impact Assessment of NIRSAL De-Risking Strategies on the Accessibility of Institutional Lending for Farmers in Cross River State, Nigeria

The creation of Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) was exigent on poor credit delivery to agricultural sector in Nigeria occasioned by high percentage financial risks of most formal financial institutions who lent to the sector. The study assessed the role of NIRSAL in de-risking institutional lending to farmers in Cross River State. Specifically, the study assessed the current challenges and risks faced by farmers regarding institutional lending for agricultural purposes; investigated the level of awareness and understanding of farmers concerning NIRSAL and its risk-sharing mechanism; identified the key factors influencing accessibility and utilization of NIRSAL services; and evaluated the effectiveness of NIRSAL in mitigating and de-risking institutional loans to farmers in the study area. Primary and secondary data were used for the study, and 684 respondents were selected for the study. The data obtained were analyzed using a Likert, Ordered Probit Model, Logit Model and Propensity Score Matching models. The study established a significant gender disparity in awareness and access to NIRSAL services, with female farmers facing considerable barriers (p-values =0.060, 0.072, and 0.050, for the Ordered Probit). The study further showed that previous experience (p-value = 0.000) of earlier government schemes/programmes and how far they were from farmers (p-value = 0.000) positively influenced access to these services, but the overall participation rate remained low at 15.76%. Although farmers could gain substantial financial benefits (N208, 750 ≡ 130.47USD per farmer) from NIRSAL's risk-sharing mechanisms, they were often limited by the distance to financial institutions and to NIRSAL. The study, therefore, recommends among others, that NIRSAL collaborate with Non-governmental organizations and Community-based organizations to facilitate training and outreach efforts, ensuring more farmers are informed about its services; create incentive programmes that encourage farmers to engage with it, such as reduced fees for participation or additional support for first-time users; and collaborate with financial institutions to establish agent banking system in the rural farming communities to serve farmers in these areas due to distance problem to urban centers.