The Central Bank of Nigeria (CBN) has identified weak agricultural infrastructure, inadequate research funding and other structural problems as major factors making it difficult for Nigerian farmers to access finance.
The CBN Deputy Director, Dr Michael Ononugbo, said increasing the amount of money available to farmers would not completely solve the financing problem if other challenges affecting agricultural production were not addressed.
Ononugbo spoke at the National Close-Out Conference of the Global Project for the Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas, known as GP AgFin Nigeria, held in Abuja.
The eight-year project was funded by the German government and implemented by the German development agency, GIZ. It reached more than 101,000 farmers and agribusinesses across 10 states during its implementation.
According to the CBN official, many smallholder farmers and rural businesses do not easily qualify for conventional loans because of the conditions under which they operate.
He identified several challenges, including fragmented farmland, poor access to technology, inadequate infrastructure, insufficient storage facilities, climate-related risks and changes in commodity prices.
Farmers may also struggle to provide proper financial records and enough collateral required by financial institutions. These challenges can make lenders more cautious when providing loans to agricultural businesses.
Ononugbo said the problem was therefore not simply a shortage of money in the financial system. He said agricultural financing must also be designed around the realities of farming.
For example, a loan may not produce the expected result if it is given to a farmer too late in the production cycle. Financing can also become difficult when the cost of borrowing is too high or when repayment arrangements do not match the period when farmers expect to earn income from their crops or businesses.
The CBN official said the country needed to move from focusing only on increasing agricultural credit to making sure that the available financing was properly structured and useful to farmers.
He also called for greater investment in agricultural research and innovation.
According to him, research is important because it can help develop better technologies, farming methods and solutions to challenges affecting agricultural production.
The issue of infrastructure is also important because farmers need good roads, storage facilities, electricity, irrigation and access to markets to operate effectively.
Without these facilities, farmers can lose part of their produce after harvest or struggle to transport their goods to buyers. Such problems can reduce the income available to farmers and make it more difficult for them to repay loans.
The GP AgFin Nigeria project recorded significant growth in the number of people reached through financial services. The number of financial service users increased from 1,260 in 2020 to more than 101,000 by the middle of 2026. Loan disbursements also increased from €776,000 in 2021 to €53.9 million.
The project also supported 11 financial institutions in developing agricultural finance products. Of the 22 products tested through the programme, 19 had been permanently added to the portfolios of participating financial institutions.
Women accounted for 53 per cent of people who received financial literacy training under the project. However, women and young people still face difficulties accessing formal credit.
GIZ’s Cluster Coordinator for the Transformation of Agri-Food Systems programme, Dr Andrea Rüdiger, said the next challenge was to ensure that the lessons from the project continued after the programme officially ends.
She called for the approaches and financial products developed through GP AgFin Nigeria to become part of the normal operations of financial institutions and government policies.
The project is expected to formally close in October 2026, with its tools, partnerships and lessons moving into another GIZ programme supported by the European Union and the German government.
The CBN’s position highlights the wider challenges facing agricultural financing in Nigeria. While access to loans remains important, farmers also need the infrastructure, technology, research, storage and market access required to make productive use of the money they receive.
Stakeholders therefore want agricultural finance policies to address both the availability of funds and the conditions that determine whether farmers can successfully use and repay those funds.
