PUBLIC FUNDS INSUFFICIENT TO MEET NIGERIA’S AGRICULTURAL NEEDS – CBN
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By: Hammad Fasasi
The Central Bank of Nigeria (CBN) has said that government funding alone cannot meet the country’s agricultural financing needs, urging increased private-sector investment to bridge funding gaps, boost productivity and strengthen food security.
The CBN Governor, Olayemi Cardoso, made this known on Tuesday in his keynote address at the National Stakeholder Roundtable on Strengthening Agricultural Credit Guarantees, held at Fraser Suites, Abuja.
Cardoso, who was represented by the Deputy Governor in charge of Financial System Stability, Lamido Yuguda, said Nigeria needed sustainable financing arrangements capable of attracting commercial investment while reducing the risks associated with agricultural lending.
He noted that public resources should be strategically deployed to attract larger volumes of commercial and development finance into the agricultural sector.
“The scale of Nigeria’s agricultural financing needs cannot be met by public resources alone. Guarantee mechanisms must therefore be designed to achieve additionality, using public resources strategically to unlock substantially greater volumes of commercial and development finance,” he said.
The governor explained that the apex bank was repositioning its development finance activities towards market-based lending, greater private-sector participation and sustainable risk-sharing mechanisms.
According to him, agricultural financing should be guided by viable economic activities and sound lending decisions, while government institutions should concentrate on addressing market failures and structural challenges.
“Our objective should be to crowd private capital in, not crowd it out,” Cardoso said.
He identified climate-related risks, fluctuations in commodity prices, inadequate collateral, information gaps and seasonal production cycles as major challenges limiting financial institutions’ ability to provide sufficient credit to farmers.
Cardoso stressed that agricultural credit guarantees should go beyond protecting lenders against loan defaults to becoming instruments for attracting additional investment across agricultural value chains.
“The future of agricultural credit guarantees must therefore go beyond protecting lenders against default. Guarantee arrangements should increasingly serve as catalytic instruments that improve risk allocation, strengthen lender confidence and unlock additional private capital for productive investment across agricultural value chains,” he said.
He outlined four key priorities for strengthening agricultural financing: improved institutional coordination, climate-risk management, digital transformation and private capital mobilisation.
The CBN governor called for stronger collaboration among commercial banks, microfinance banks, insurance companies, development finance institutions and government agencies to address fragmentation and improve credit delivery.
He also advocated the integration of agricultural insurance, climate-risk mitigation and data-driven credit assessments into existing guarantee arrangements.
On technology, Cardoso said modernising the Agricultural Credit Guarantee Scheme Fund (ACGSF) would improve processing speed, monitoring, transparency and credit-risk assessment.
He assured stakeholders that the CBN would continue to provide the monetary, regulatory and institutional support needed to promote sustainable investment in agriculture.
Earlier, the Chairman of the ACGSF Board, Dr Olusegun Oshin, expressed concern over the high cost of borrowing, noting that existing agricultural financing conditions often failed to reflect farmers’ production cycles.
“That high interest rate is an issue, and it’s something that we are looking at considerably,” he said.
Oshin explained that farmers required affordable financing arrangements that would enable them to recover production costs and make reasonable profits.
He disclosed plans to transform the ACGSF from a traditional credit guarantee institution into a more responsive organisation capable of supporting sustainable agricultural financing.
“Our ultimate ambition is not simply to issue more guarantees, but to facilitate additional agricultural lending at affordable prices, strengthen lender confidence, improve farmers’ access to finance,” he said.
He added that the scheme was exploring co-financing, refinancing, agricultural insurance and stronger institutional partnerships to improve access to credit.
In his welcome address, the Acting Director of the CBN’s Development Finance Advisory Department, Dr Paul Oluikpe, said financing constraints continued to hinder agricultural productivity and investment.
He noted that many farmers and agribusinesses struggled to access credit, while borrowing costs, repayment arrangements and collateral requirements often failed to accommodate the realities of agricultural production.
Oluikpe said the ACGSF, established in 1977, required continuous reforms to remain relevant amid changing market conditions and technological developments.
He also announced the unveiling of the scheme’s new brand identity and online portal, as well as the presentation of revised operational guidelines as an exposure draft for stakeholders’ contributions.
According to him, the two-day roundtable would examine issues including agricultural insurance, climate-risk management, private capital mobilisation and strategic partnerships.
He said the success of the engagement would be measured by the practical recommendations generated, stronger institutional collaboration and tangible improvements in agricultural credit delivery.
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