The Central Bank of Nigeria (CBN) has identified weak agricultural infrastructure, inadequate research funding and other structural challenges as major factors limiting farmers’ access to finance.
The Deputy Director of the CBN, Dr Michael Ononugbo, said increasing the volume of credit available to the agricultural sector would not, on its own, resolve the financing challenges facing farmers and rural businesses without addressing the constraints affecting production.
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 (GP AgFin Nigeria) in Abuja.
The eight-year project, funded by the German government and commissioned by the Federal Ministry for Economic Cooperation and Development, was implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
The intervention reached 101,449 farmers and agribusinesses across 10 states during its implementation period.
According to Ononugbo, many smallholder farmers and rural enterprises operate under conditions that make them difficult customers for conventional financial institutions.
He identified fragmented farmland, limited access to technology, inadequate infrastructure and storage facilities, climate-related risks and fluctuations in commodity prices as some of the factors affecting agricultural businesses.
He added that inadequate financial records and insufficient collateral among farmers, as well as limited information about their businesses, further complicated lending decisions by financial institutions.
Ononugbo said the challenges had left many agricultural producers without adequate access to formal financial services despite the sector’s importance to the Nigerian economy.
Speaking on the theme, “From Access to Impact: Embedding Agricultural Finance in Nigeria’s Economic Policy Architecture,” he said attention should move beyond increasing the supply of agricultural credit to ensuring that financing was structured around the realities of farmers.
He noted that agricultural financing arrangements could fail to achieve their intended outcomes when funds were provided at the wrong time, poorly structured, priced beyond borrowers’ capacity or disconnected from production cycles.
The CBN official, who also serves as Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, called for a broader assessment of the factors affecting agricultural productivity alongside efforts to increase lending to the sector.
He particularly advocated increased investment in agricultural research and innovation, questioning the proportion of agricultural financing currently directed towards research.
Ononugbo said inadequate research funding could limit Nigeria’s ability to develop new technologies, production methods and other solutions needed to improve agricultural productivity.
He stressed that sustained investment in research was necessary to develop innovative responses to the challenges confronting the agricultural sector.
Also speaking at the conference, the Cluster Coordinator for GIZ’s Transformation of Agri-Food Systems programme, Dr Andrea Rüdiger, said GP AgFin Nigeria had demonstrated that targeted interventions could strengthen links between farmers and financial institutions.
Rüdiger said the next step was to integrate the lessons and approaches developed under the project into the regular operations of financial institutions and relevant government policies.
She also called for stronger integration of the project’s experience into efforts to improve compliance with the CBN’s agricultural lending target.
According to her, the number of financial service users reached through the project rose from 1,260 in 2020 to more than 101,000 by mid-2026.
She said the value of loans disbursed also increased from €776,000 in 2021 to €53.9 million.
Rüdiger disclosed that 11 financial institutions received support to develop agricultural finance products, while 19 of the 22 products tested under the project had been permanently incorporated into the portfolios of partner institutions.
She added that women accounted for 53 per cent of beneficiaries who received financial literacy training, although women and young people continued to face challenges accessing formal credit.
The project is scheduled to formally close in October 2026, with its tools, partnerships and lessons transitioning into GIZ’s Value Chain Enhancement programme, funded by the European Union and the German Federal Ministry for Economic Cooperation and Development.
Stakeholders at the conference said sustaining the gains recorded under GP AgFin Nigeria would require the integration of its lessons into Nigeria’s agricultural and broader development policies, alongside continued efforts by financial institutions to develop products suited to farmers and rural enterprises.
