CBN: POOR FUNDING, INFRASTRUCTURE HINDER AGRICULTURAL LENDING
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By: Muftau Fatimo
Poor funding for agricultural research and inadequate infrastructure are among the major factors limiting access to finance for Nigerian farmers, a Central Bank of Nigeria (CBN) official has said.
The CBN Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, Dr Michael Ononugbo, said Nigeria’s agricultural financing gap was largely driven by structural challenges rather than a lack of capital alone.
Ononugbo made the remarks at the National Close-Out Conference of the Global Project for the Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas (GP AgFin Nigeria), held in Abuja.
The eight-year German-funded project, commissioned by Germany’s Federal Ministry for Economic Cooperation and Development and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), reached 101,449 farmers and agribusinesses across 10 states.
Speaking on the theme, “From Access to Impact: Embedding Agricultural Finance in Nigeria’s Economic Policy Architecture,” Ononugbo said smallholder farmers and rural enterprises faced several challenges that made conventional lending difficult.
He said farmers “often operate in environments characterised by fragmented landholdings, limited access to technology, weak infrastructure, inadequate storage facilities, climate-related vulnerabilities, and volatile commodity prices,” compounded by “limited financial records, insufficient collateral, and information asymmetries that make conventional lending models difficult to apply effectively.”
As a result, he said agricultural producers were “frequently underserved by formal financial institutions despite the strategic importance of the sector.”
Ononugbo said successive policies had focused too much on increasing credit supply without addressing whether financing was suitable for farmers’ realities.
“The challenge, therefore, is not merely the availability of finance but the effectiveness, appropriateness, and sustainability of financing arrangements,” he said.
He warned that financing that was “poorly structured, untimely, expensive, or disconnected from production realities may fail to improve productivity and, in some cases, may exacerbate the vulnerability of borrowers.”
The CBN official also questioned the level of funding for agricultural research, saying inadequate investment was limiting innovation and productivity.
We must place greater emphasis on agricultural research and innovation. How much of the financing do we channel to research in agriculture? Innovative solutions and revolutionary practices will continue to elude us,” he said.
He said sustained investment in research was necessary to develop innovative solutions and improve productivity in the agricultural sector.
The Cluster Coordinator for GIZ’s Transformation of Agri-Food Systems programme, Dr Andrea Rüdiger, said the GP AgFin experience showed that the financing gap could be reduced through appropriate tools and institutional support.
GP AgFin Nigeria proved that the gap between farmers and finance can be closed. Today, we decide together what closing it at scale actually looks like,” Rüdiger said.
She called for the project’s lessons to be integrated into mainstream policy and financial institutions, including efforts to improve compliance with the CBN’s agricultural lending target.
Rüdiger said the project had grown from 1,260 financial service users in 2020 to more than 101,000 by mid-2026, while loan disbursements rose from €776,000 in 2021 to €53.9m.
She said 11 financial institutions were supported to develop agricultural finance products, with 19 of the 22 products piloted now permanently integrated into partner institutions’ portfolios
Women accounted for 53 per cent of financial literacy trainees under the project, while women and youths remained among groups identified as underserved by formal credit.
The project’s tools and partnerships are expected to transition into GIZ’s EU- and BMZ-co-funded Value Chain Enhancement programme as GP AgFin formally winds down in October 2026.
The stakeholders said embedding the project’s lessons in national development and agricultural policy frameworks would be critical to sustaining access to finance beyond the intervention.
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