Follow Us on Google
The Central Bank of Nigeria (CBN) has unveiled a new strategic plan, which will expand access to credit for smallholder farmers and accelerate national food security. However, its success will largely depend on adequate disbursement and supervision of the fund. The CBN Governor, Olayemi Cardoso, made the disclosure at the launch of the Agricultural Credit Guarantee Scheme Fund (ACGSF) in Abuja. There is no doubt that agricultural financing is indispensable in repositioning the vital sector. Smallholder farmers constitute about 80 per cent of Nigerian farmers, and produce no less than 90 per cent of the nation’s food, yet they face high risks of credit facility.
According to recent figures from the National Bureau of Statistics (NBS), the agricultural sector contributed N30.5 trillion in nominal terms to the Gross Domestic Product (GDP) in the Q3 2025. Crop production drove the agro-sectoral growth, which was attributed to improved investor confidence. This represents one of the sector’s strongest quarterly performances in recent years, with crop production alone accounting for N20.13trillion or 66 per cent. The sector posted a real GDP growth rate of 3.79 per cent year-on-year, surpassing its Q3 2024 performance of 2.55 per cent in Q2 2025 by 0.97 per cent. This is as a result of poor access to bank credit. The new strategic direction for the sector is timely. It is coming at a time that Nigeria’s food security is being threatened. It also serves as an inclusive growth drive in rural development and economic diversification.
We recall that the ACGSF, which was first established in 1977, remains Nigeria’s most impactful development finance tool. Despite employing about two-thirds of the nation’s labour force, and contributing over 20 per cent of the GDP, the sector continues to receive less than five per cent of total bank credit, according to a recent CBN statistics. This structural mismatch has stunted the potential of millions of farmers for decades. Latest reports show that millions of smallholder farmers have abandoned their farms due to insecurity.
Currently, the agric sector has evolved far beyond subsistence farming. It is now governed by integrated value chains, technology, climate risks, and growing agric-tech ecosystem. We implore that the scheme must be seamlessly implemented to cater for the needs of smallholder farmers. Following the 2019 amendment to the ACGSF that increased the scheme’s share capital to N50billion from N3billion and broadened its operational scope, one of the notable outcomes of the review was the inclusion of farmers’ representatives on the new board. Under the initiative, the credit needs of smallholder farmers would be met. Hitherto, these farmers had been underserved due to limited collateral, poor credit history, and access to financial services.
The new board, headed by Dr Olusegun Oshin, must live up to expectations. Members of the board should design strategic products tailored to meet the needs of women, youths, and other underserved smallholder farmers. They should leverage on diverse financial tools such as fintech, microfinance bank, and cooperative societies to deliver innovative lending models. They should use technology to track loan utilisation. Agriculture, which used to be the mainstay of the economy, must be given due attention. At the moment, the potential of the sector is yet to be tapped. This is the time to lift the agric sector from underfunding that has impeded the growth of the sector. For instance, Benue State is no longer the ‘food basket’ of the country because of insecurity linked to recurring farmers/herders clashes. The perennial conflict has hampered food production as farmers to desert their farms.
The farmers/herders crisis has led to destruction of crops, displacement of communities and the disruption of food supply chains. It has also altered planting and harvest seasons, limited access to fertiliser, and increased the cost of food items. This has resulted in significant drops in agricultural output and reduced incomes. In all, the smallholder farmers should access the fund at lower interest rate. Even farmers considered ‘unbankable’ should be encouraged with zero interest loans and tax waivers.
Most importantly, the government should make Nigeria’s business environment friendly by removing multiple taxes that undermine business investment and growth. Stronger oversight, close monitoring and evaluation are necessary to make the scheme succeed. State governments and the private sector should be carried along. Smallholder farmers need quality farm inputs, knowledge transfer and stronger market linkages such as enhanced bargaining power, proper training in money management and savings that will help them build financial resilience and make informed investment decisions. Government should also initiate measures to check post-harvest losses and improve rural infrastructure.
