Effects of Nigeria Incentive-Based Risk Sharing System for Agricultural Lending on the Performance of the Agricultural Sector in Nigeria

Nigeria’s agricultural sector is central to economic development, food security, and employment generation, yet its growth has been persistently constrained by limited access to credit. To address this challenge and reduce the risks associated with agricultural lending, the Central Bank of Nigeria established the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) in 2011 to stimulate increased financial support for agribusinesses. This study examined the effect of NIRSAL on the performance of the agricultural sector in Nigeria. The study adopted an ex-post facto research design and utilised time-series secondary data obtained from the Central Bank of Nigeria, the National Bureau of Statistics, and the Federal Ministry of Agriculture and Rural Development for the period 2013–2024. Data analysis involved the use of descriptive statistics and a range of econometric diagnostic tests, including the Augmented Dickey-Fuller unit root test, tests for multicollinearity, serial correlation, heteroskedasticity, normality, and model stability. These analyses were conducted using E-Views 10 statistical software. The Ordinary Least Squares (OLS) technique was employed to estimate the model, while multiple regression analysis was used to test the formulated hypotheses. The results indicate that NIRSAL has a statistically significant and positive impact on agricultural productivity and financial inclusion in Nigeria. Based on these findings, the study recommends that the Federal Government, through the Ministry of Agriculture and Rural Development, should strengthen institutional, operational, and information-sharing collaboration between NIRSAL and state-level agricultural extension services. This would ensure that recipients of NIRSAL-supported loans benefit from regular capacity-building programmes, including at least quarterly training sessions, complemented by monthly or bimonthly field supervision and ongoing technical support on modern and sustainable agricultural practices aligned with the agricultural production cycle.