The Central Bank of Nigeria (CBN) has identified weak agricultural infrastructure, inadequate research funding, and other structural challenges as major obstacles preventing farmers from accessing finance. According to Dr. Michael Ononugbo, Deputy Director at the CBN, these challenges limit the ability of farmers and rural businesses to access credit. He made this statement 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) in Abuja.
The eight-year GP AgFin Nigeria project, funded by the German government and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), has reached 101,449 farmers and agribusinesses across 10 states. The project aimed to improve access to finance for farmers and rural enterprises. However, Ononugbo noted that expanding credit availability to agriculture would not be enough to address financing challenges if other production constraints remained unresolved.
Ononugbo identified several factors that make smallholder farmers and rural enterprises difficult customers for conventional financial institutions. These include fragmented farmland, poor access to technology, inadequate infrastructure and storage facilities, exposure to climate-related risks, and fluctuations in commodity prices. Additionally, many farmers lack proper financial records and sufficient collateral, while limited information about their businesses creates difficulties for lenders.
The CBN official emphasized that attention should shift from simply increasing agricultural credit supply to ensuring available financing is designed around farmers' realities. He noted that some agricultural financing arrangements can fail to deliver desired results if funds are provided at the wrong time, structured poorly, priced beyond borrowers' capacity, or disconnected from the production cycle. Ononugbo stressed the need to examine broader factors affecting agricultural productivity alongside efforts to expand lending.
Ononugbo called for increased investment in agricultural research and innovation, questioning the proportion of agricultural financing directed towards research. He believes inadequate research funding prevents Nigeria from developing new technologies, production methods, and solutions to improve agricultural productivity. Sustained investment in research is necessary to generate innovative approaches to challenges facing the agricultural sector.
Dr. Andrea Rüdiger, Cluster Coordinator for GIZ's Transformation of Agri Food Systems programme, said the GP AgFin Nigeria project demonstrated that targeted interventions can help bring farmers and financial institutions closer together. The project increased financial service users from 1,260 in 2020 to over 101,000 by mid-2026 and disbursed loans worth €53.9 million. Rüdiger emphasized the need to incorporate project lessons into regular operations of financial institutions and relevant government policies.
Stakeholders at the conference stressed that maintaining gains recorded under GP AgFin depends on incorporating its lessons into Nigeria's agricultural and broader development policies. They also emphasized the need for financial institutions to develop products suited to farmers' and rural enterprises' needs. The project's tools, partnerships, and lessons will transition into GIZ's Value Chain Enhancement programme, funded by the European Union and the German Federal Ministry for Economic Cooperation and Development.
Key points
- Weak agricultural infrastructure and inadequate research funding hinder farmers' access to finance in Nigeria.
- The GP AgFin Nigeria project has reached 101,449 farmers and agribusinesses across 10 states.
- Stakeholders emphasize the need to incorporate project lessons into Nigeria's agricultural and broader development policies.