How to encourage participation in the national olympiad in informatics?
Personally, assembling a team (or club etc.) of those students and teach them the relevant material would encourage most (if not all) of them to participate.

Also, finding a guide\mentor who can teach them would give the sense of, for lack of a better word, prestige. 

Here, where I live, there's a national competition and it's very popular, due to the use of the aforementioned method.