Access to loans by farmers and agribusinesses in Nigeria is being affected by poor infrastructure and inadequate funding for agricultural research, the Central Bank of Nigeria has said.
The CBN Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, Dr Michael Ononugbo, said the country’s agricultural finance gap was linked to structural challenges rather than a lack of capital alone.
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.
He identified fragmented landholdings, poor infrastructure, inadequate storage facilities, limited access to technology, climate-related risks and unstable commodity prices as some of the challenges making it difficult for financial institutions to lend to smallholder farmers and rural businesses.
Ononugbo also identified poor financial records, insufficient collateral and limited information about farmers’ businesses as factors making it difficult for banks and other lenders to assess their creditworthiness.
The CBN official said these challenges had left many agricultural producers underserved by formal financial institutions despite the importance of agriculture to the economy.
Ononugbo said previous efforts had placed too much emphasis on increasing the amount of credit available without paying enough attention to whether the financing was suitable for the realities of farmers.
“The challenge, therefore, is not merely the availability of finance but the effectiveness, appropriateness, and sustainability of financing arrangements,” he said.
He warned that loans that are poorly structured, expensive or provided at the wrong time may fail to improve productivity and could increase the financial difficulties faced by borrowers.
Ononugbo also raised concerns about inadequate funding for agricultural research and innovation, asking delegates, “How much of the financing do we channel to research in agriculture?”
“We must place greater emphasis on agricultural research and innovation. Innovative solutions and revolutionary practices will continue to elude us,” he said.
The GP AgFin Nigeria project, which ran from 2018 to 2026, reached more than 101,000 farmers and agribusinesses across 10 states. The programme also supported financial institutions in developing agricultural finance products targeted at the needs of farmers and rural businesses.
Project officials said partner financial institutions had disbursed €53.9m to farmers and agribusinesses during the programme, while 19 of the 22 agricultural finance products developed through the project had been permanently integrated into the portfolios of partner institutions.
The stakeholders said ensuring that the lessons and financial products developed through the project remain within Nigeria’s financial system would be important after the programme formally ends in October 2026.