**By Simpson Global Media News Desk**
Nigeria’s agricultural finance challenge is being linked increasingly to problems beyond the availability of money, with a Central Bank of Nigeria official identifying weak infrastructure, inadequate agricultural research funding, limited technology, poor storage systems and other structural constraints as major barriers preventing farmers from obtaining and effectively using formal credit.
The warning was delivered by the CBN Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, Dr Michael Ononugbo, 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.
Ononugbo said simply increasing the amount of money available for agricultural lending would not by itself resolve the financing difficulties confronting farmers and rural enterprises.
He argued that agricultural credit must be designed around the actual production cycles, risks and operating conditions of farmers if it is to translate into higher productivity, stronger incomes, employment and food security.
His comments came as the eight-year GP AgFin Nigeria intervention, funded by the German Federal Ministry for Economic Cooperation and Development and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit, or GIZ, moves towards its formal conclusion in October 2026.
The project says it facilitated €53.9 million, equivalent to about ₦61 billion, in financing through partner financial institutions to 101,449 farmers and agribusinesses across 10 Nigerian states. It also recorded 150,300 financial transactions and supported the development and piloting of 22 agricultural financial products, 19 of which were subsequently integrated permanently into the portfolios of partner institutions without continued GIZ/AgFin funding. :contentReference[oaicite:1]{index=1}
The experience has consequently placed a larger question before policymakers and financial institutions: whether Nigeria's agricultural finance problem should be treated primarily as a shortage of credit, or as a wider problem involving the way farming businesses are structured, assessed, financed and connected to markets.
## Beyond the Question of More Credit
For years, access to finance has been identified as one of the persistent constraints on agricultural development in Nigeria.
Farmers require financing at different stages of the production cycle. They need money for land preparation, seeds, fertiliser, pesticides, labour, machinery, irrigation, livestock, feed, storage, transportation, processing and marketing.
The timing of such financing can be as important as the amount.
A crop farmer who receives credit after the planting window has passed may not be able to use the money effectively. A poultry farmer may require financing according to the cycle of stocking birds, feeding them and selling them. A rice processor or cassava aggregator may need working capital at a different point in the value chain.
Agricultural businesses therefore do not always fit neatly into conventional lending models built around fixed repayment schedules and conventional collateral.
That is one of the issues highlighted by Ononugbo.
According to the CBN official, many smallholder farmers and rural businesses operate under circumstances that make them difficult customers for traditional financial institutions. Fragmented farmland, inadequate infrastructure, limited technology, insufficient storage facilities, climate-related risks and fluctuations in commodity prices can all affect the performance of agricultural businesses. :contentReference[oaicite:2]{index=2}
The situation is further complicated where farmers lack formal financial records or sufficient collateral.
For a conventional lender, the absence of reliable business records can make it harder to determine a borrower's cash flow, repayment capacity and business performance.
Land fragmentation can also make agricultural operations more difficult to assess. Climate shocks can suddenly reduce production, while changes in commodity prices can alter expected revenue between the time a loan is granted and the time repayment becomes due.
The result is a financing environment in which the farmer may need credit but the lender may consider the business difficult to assess or manage using conventional banking procedures.
Ononugbo's position is that addressing this problem requires changes to the wider agricultural ecosystem, not simply an expansion of the volume of loans.
## What the Eight-Year GP AgFin Project Shows
The experience of GP AgFin provides a practical case study of what can happen when financial institutions are supported to understand agricultural businesses more closely.
The project operated between 2018 and 2026 across 10 Nigerian states and focused on value chains including maize, rice, cassava, Irish potato, poultry and aquaculture. :contentReference[oaicite:3]{index=3}
Its approach was not simply to distribute development funds directly to farmers.
Instead, the programme worked with financial institutions and agricultural businesses to develop financial products and lending approaches that reflected the realities of particular agricultural value chains.
According to figures presented by the project, 101,449 farmers and agribusinesses accessed adapted financial products and services during the intervention.
Partner financial institutions recorded 150,300 transactions, while €53.9 million was disbursed without guarantees or warranties from GP AgFin.
The programme also developed and piloted 22 tailored agricultural financial products.
Nineteen of those products were subsequently integrated permanently into partner financial institutions' portfolios without continued GIZ/AgFin funding, while 19 incorporated digital delivery mechanisms. :contentReference[oaicite:4]{index=4}
The figures are significant because they point to an approach in which the financial system itself is adjusted to accommodate agricultural businesses rather than expecting farmers to conform entirely to conventional banking structures.
The project reported that the number of financial-service users increased from 1,260 in 2020 to more than 101,000 by the middle of 2026.
Loan disbursements rose from €776,000 in 2021 to €53.9 million, according to GIZ project figures reported at the close-out activities. :contentReference[oaicite:5]{index=5}
The programme also reported repayment rates of more than 90 per cent among partner microfinance banks.
Those figures do not mean that agricultural lending has become risk-free. Rather, the project has presented them as evidence that lending can become more workable when financial institutions understand agricultural production cycles, business models and risks more effectively. :contentReference[oaicite:6]{index=6}
## Why Infrastructure Matters to Agricultural Finance
The CBN's argument places physical infrastructure at the centre of the agricultural finance debate.
For farmers, a loan does not operate in isolation.
A farmer may receive financing for improved seeds and fertiliser, but the expected return can be affected by the condition of roads connecting the farm to the market.
A producer may increase output but suffer losses because there is insufficient storage.
A poultry farmer may obtain credit to expand production but face higher operating costs when electricity, feed supply or transport systems are unreliable.
A rice or cassava processor may have adequate working capital but be unable to operate efficiently without dependable energy, water, transport or processing infrastructure.
These constraints can influence both the profitability of the agricultural business and the lender's assessment of repayment risk.
This is why Ononugbo said increasing agricultural credit without addressing the surrounding constraints would not be sufficient.
The argument also places agricultural finance within the wider question of rural development.
Financial institutions can provide capital, but they cannot by themselves build every road, storage facility, irrigation network or agricultural research centre needed to make rural businesses more productive.
Consequently, agricultural lending policy intersects with infrastructure policy, climate policy, research policy, land administration, market regulation and rural development.
## Storage and Post-Harvest Losses
Storage is another important part of the equation.
Agricultural production is seasonal, but food demand continues throughout the year.
Farmers who harvest large quantities at the same time can face lower prices if they have no means of storing produce and waiting for better market conditions.
Poor storage can also contribute to physical losses and deterioration in quality.
For lenders, post-harvest losses can translate into weaker cash flows and increased repayment risks.
For farmers, it can mean that a crop financed with borrowed money generates less income than expected.
This creates a cycle in which the lender becomes more cautious, while the farmer continues to face difficulty accessing affordable credit.
Improving storage therefore has implications beyond reducing food waste. It can strengthen the underlying economics of agricultural enterprises and potentially improve their ability to service loans.
The same principle applies to transportation.
Where farm-to-market logistics are poor, farmers may incur higher costs and receive lower farm-gate prices.
An agricultural finance system that ignores those factors can provide capital while leaving the underlying business model exposed to risks that credit alone cannot solve.
## Research Funding and Agricultural Productivity
Ononugbo also drew attention to agricultural research.
The CBN official called for greater investment in research and innovation, questioning how much agricultural financing is directed towards generating new technologies and production solutions.
The issue is important because agricultural productivity depends partly on the availability and adoption of improved technologies, crop varieties, livestock systems, production practices and climate-adaptation measures.
If farmers continue to rely on low-productivity methods while facing higher production costs and changing weather conditions, additional credit may increase the amount of money circulating in agriculture without producing a corresponding increase in output.
Research can therefore influence the quality of the investment that farmers make.
Better technologies can potentially improve yields, reduce production costs, manage pests and diseases, conserve water or improve post-harvest handling.
But research results must also move from laboratories and institutions to farmers.
That requires extension services, training, demonstration farms, accessible information and financing arrangements that allow producers to adopt new technologies.
The CBN's position consequently connects agricultural research with agricultural finance: innovation can improve the underlying productivity of businesses, while appropriately designed finance can help farmers adopt productive technologies.
## The Problem of Collateral
Collateral remains another barrier for many smallholder farmers.
Traditional lending often relies on tangible assets to reduce the lender's exposure to default.
Yet many smallholder farmers operate on modest plots, informal arrangements or assets that may not easily meet conventional banking requirements.
The CBN maintains an Agricultural Credit Guarantee Scheme Fund designed to encourage banks to lend to agricultural businesses by providing guarantees on eligible loans. The scheme, established in 1977 and operational from 1978, is managed by the CBN, with the Federal Government and the CBN contributing to its subscribed capital. The scheme says it can guarantee up to 75 per cent of the net amount in default under its rules. :contentReference[oaicite:7]{index=7}
The existence of such mechanisms demonstrates that agricultural lending has long required specialised approaches to risk.
But the challenge is broader than guarantees.
Financial institutions must still understand the businesses receiving the loans, monitor the use of funds and assess whether the financed activity can generate sufficient revenue for repayment.
This is one reason GP AgFin's focus on financial institutions is important.
Instead of treating farmers only as loan applicants, the project worked to improve the capacity of lenders to understand agricultural value chains and develop products suited to them.
## Designing Loans Around Production Cycles
Agricultural businesses do not all generate income at the same pace.
A crop farmer may spend several months on production before receiving income from harvest.
A poultry enterprise has a different cycle.
Aquaculture has another.
Processors and aggregators may need short-term working capital to purchase crops during harvest periods and sell processed products later.
A loan structure that ignores these differences can create unnecessary pressure on borrowers.
At the Abuja conference, Ononugbo said some financing arrangements can fail to achieve their intended results when funds are provided at the wrong time, structured poorly, priced beyond borrowers' capacity or disconnected from the production cycle. :contentReference[oaicite:8]{index=8}
This is central to the concept of value-chain finance.
Rather than offering one generic agricultural loan, financial institutions can examine the particular economics of a commodity and structure financing around the farmer's expected cash flow.
The GP AgFin programme reported that this approach helped partner institutions develop tailored products for different value chains.
A documented example from GIZ involves Light Microfinance Bank in Plateau State, which developed specialised agricultural products including an Irish potato financing product after receiving support under the programme.
GIZ reported that the bank's agricultural loan portfolio increased from ₦600 million in 2021 to more than ₦1.7 billion by 2025, while its portfolio-at-risk ratio declined from 18.81 per cent in 2021 to 7.14 per cent by December 2025. :contentReference[oaicite:9]{index=9}
The example is not a guarantee that the same result will occur everywhere, but it illustrates the type of institutional change the programme sought to encourage.
## Financial Literacy on the Farmer's Side
The financing problem is not solely a lender problem.
Farmers also need the skills to manage borrowed money as a business resource.
GP AgFin reported that 21,128 farmers and agribusiness managers completed financial-literacy training during the project.
Women accounted for 53 per cent of participants in the project's financial-literacy training, according to project figures reported at the close-out conference. :contentReference[oaicite:10]{index=10}
The training addressed financial management and helped participants understand concepts relevant to savings, loans, investment and business planning.
GIZ has also worked with Federal Colleges of Agriculture in Ibadan, Kano and Akure to institutionalise its Farmer Financial Cycle training.
The programme's approach was intended to ensure that financial-management knowledge would continue to be taught beyond the life of the intervention. :contentReference[oaicite:11]{index=11}
This matters because a farmer's ability to keep records can influence the lender's ability to understand the business.
Records of production costs, sales, cash flow and repayment history can provide information that conventional lenders may otherwise lack.
Improving financial literacy can therefore contribute to what financial institutions sometimes describe as the "bankability" of agricultural enterprises.
## Women and Young Farmers
The financing gap also has a social dimension.
Women and young people remain among groups that can encounter additional difficulties in obtaining formal credit.
GP AgFin's reported participation figures show that women accounted for a majority of those receiving financial-literacy training, although the project also identified continuing barriers to formal credit for women and young people. :contentReference[oaicite:12]{index=12}
Addressing these barriers requires more than simply creating a loan product labelled for women or youth.
It can involve examining collateral requirements, financial records, guarantor requirements, business registration, access to markets, land rights and the timing of repayment.
Women involved in agriculture may also participate in several parts of a value chain, including production, processing, aggregation and trading.
Financial products that recognise those activities can potentially reach businesses that would otherwise remain outside formal finance.
GIZ has documented cases in Nigeria in which women used agricultural credit alongside training to expand production and move into processing.
One example involves a cassava farmer in Ogun State who, after participating in Farmer Financial Cycle training, accessed credit, expanded her farm and subsequently invested in processing equipment. :contentReference[oaicite:13]{index=13}
Such individual cases cannot by themselves establish a nationwide outcome, but they demonstrate the type of connection between finance, training, production and value addition that agricultural-finance programmes seek to create.
## Digital Finance as Part of the Transition
Digital systems are also becoming increasingly important in agricultural finance.
Of the 22 financial products developed and piloted under GP AgFin, the project reported that 19 incorporated digital delivery mechanisms. :contentReference[oaicite:14]{index=14}
Digital delivery can potentially reduce transaction costs, improve access to financial services and make it easier for institutions to serve customers in locations where maintaining conventional banking infrastructure is expensive.
But digital finance does not eliminate the physical challenges facing agriculture.
A farmer may be able to receive a loan digitally and still struggle because the farm lacks a good access road.
A producer may receive digital weather information but still require irrigation infrastructure.
An agricultural business may keep digital financial records but remain exposed to a lack of storage.
Technology is therefore one component of the financing ecosystem rather than a substitute for physical infrastructure and productive capacity.
## The CBN's Changing Development-Finance Approach
The discussion also comes against a broader shift in the CBN's approach to development finance.
At the GP AgFin close-out conference, CBN Governor Olayemi Cardoso said the bank had moved away from its previous emphasis on direct development-finance interventions towards strengthening institutions and systems capable of delivering credit more sustainably.
Represented at the event by CBN Director of Development Finance Advisory Department Dr Paul Oluikpe, Cardoso said the focus was increasingly on building resilient systems rather than simply providing funding for individual projects. :contentReference[oaicite:15]{index=15}
The CBN's own development-finance information says the bank has refocused on its core mandate of monetary, price and financial-system stability, while maintaining a more limited policy-advisory role in inclusive growth and sustainable economic development. Monitoring and recovery activities for existing projects continue. :contentReference[oaicite:16]{index=16}
That shift has implications for agriculture.
Rather than relying entirely on central-bank programmes to supply agricultural credit, the policy direction places greater emphasis on financial institutions, development-finance institutions, government agencies and private-sector lenders building sustainable mechanisms for financing productive activity.
The challenge will be ensuring that this transition does not leave smallholder farmers behind.
## What Happens After GP AgFin?
The next phase is arguably as important as the eight-year intervention itself.
GP AgFin is expected to formally wind down in October 2026.
Its tools, partnerships and lessons are expected to transition into GIZ's Value Chain Enhancement programme, funded by the European Union and Germany's Federal Ministry for Economic Cooperation and Development. :contentReference[oaicite:17]{index=17}
The project has already left behind financial products that participating institutions say they can continue using.
Nineteen of the 22 products piloted were reported to have been permanently incorporated into partner institutions' portfolios without continued GIZ/AgFin funding.
That creates a test of whether development interventions can produce lasting changes in the financial market rather than temporary increases in lending.
The Central Bank has also called for lessons from the project to be incorporated into existing systems.
For financial institutions, the challenge will be maintaining products designed around agricultural realities.
For government agencies, the challenge will include improving infrastructure, research, extension and other conditions that influence agricultural productivity.
For farmers, the continuing issue will be whether the availability of appropriately structured finance expands beyond the institutions and locations reached by the project.
## Agriculture Needs an Ecosystem, Not a Single Intervention
The financing debate illustrates a broader reality about Nigeria's agricultural sector.
A farmer cannot produce food with money alone.
Capital is important, but it must work alongside land, seeds, fertiliser, machinery, water, labour, knowledge, roads, storage, electricity, market access and risk-management systems.
Likewise, a financial institution cannot assess agricultural businesses effectively if it has limited information about the production cycle, commodity prices or climate risks.
This is why the CBN's latest warning has focused attention on the structure surrounding agricultural lending.
If infrastructure remains weak, the risk of agricultural businesses remains high.
If research funding is inadequate, productivity gains may remain limited.
If storage is insufficient, farmers can lose value after harvest.
If market connections are weak, producers may struggle to convert output into reliable income.
If financial products are poorly timed, borrowers may face repayment obligations before their businesses generate sufficient cash flow.
And if lenders lack information about agricultural enterprises, they may continue to regard many smallholder businesses as difficult customers.
Addressing these issues together could therefore have a greater effect on agricultural finance than simply increasing the headline volume of credit.
## From Access to Impact
The theme of the GP AgFin conference — "From Access to Impact: Embedding Agricultural Finance in Nigeria's Economic Policy Architecture" — reflects this shift in thinking.
The distinction between access and impact is important.
A farmer receiving a loan is an access outcome.
The longer-term question is what happens after the loan.
Does production increase?
Does the farmer's income improve?
Does the business create employment?
Can the borrower repay and obtain another loan?
Does the agricultural enterprise become more resilient to climate and market shocks?
Does the financing contribute to food availability and value-chain development?
Those questions determine whether financial access translates into broader economic results.
At the GP AgFin conference, Ononugbo argued that agricultural finance should ultimately be judged by its contribution to productivity, incomes, jobs, food security and sustainable economic development rather than by the volume of money disbursed alone. :contentReference[oaicite:18]{index=18}
That perspective places pressure on both policymakers and lenders to measure outcomes more carefully.
## The Larger Food-Security Context
Nigeria's agricultural sector remains central to the country's food supply and rural livelihoods.
The Central Bank's agricultural information describes the sector as a major component of the economy and identifies access to finance as a longstanding constraint. The CBN has historically used several agricultural-finance interventions and guarantee mechanisms to encourage lending. :contentReference[oaicite:19]{index=19}
At the same time, farmers are facing changing production conditions.
The Food and Agriculture Organization's September 2026 country brief for Nigeria said production prospects for some 2026 cereal crops remained uncertain, with dry spells affecting parts of several southern and central states and localized production shortfalls expected in some areas. :contentReference[oaicite:20]{index=20}
NiMet has also continued to provide seasonal climate information and agricultural advisories as part of its mandate to support planning and decision-making in weather-sensitive sectors. :contentReference[oaicite:21]{index=21}
These conditions make the relationship between finance and risk particularly important.
Agricultural credit cannot eliminate drought, floods, pests or commodity-price volatility.
But appropriate financing can potentially help farmers invest in irrigation, improved inputs, storage, insurance, technology and other risk-management measures.
The challenge is making sure that the financial product is available, affordable and timed appropriately.
## What Policymakers and Lenders Face Next
The emerging policy discussion points to several areas requiring continued attention.
The first is infrastructure.
Rural roads, storage facilities, irrigation systems, electricity and processing infrastructure can influence the commercial viability of agricultural businesses.
The second is research.
Investment in agricultural science and technology is necessary to improve productivity and help farmers respond to changing environmental and market conditions.
The third is financial product design.
Lenders need mechanisms that reflect crop cycles, livestock cycles, value-chain relationships and agricultural cash flows.
The fourth is risk management.
Insurance, credit guarantees, warehouse receipt systems and blended-finance mechanisms can help address some of the risks associated with agricultural lending. Ononugbo specifically advocated greater use of such tools. :contentReference[oaicite:22]{index=22}
The fifth is financial information.
Farmers and agribusinesses with reliable records may be easier for lenders to assess, making financial literacy and digital record-keeping relevant to access to credit.
The sixth is institutional continuity.
Programmes should leave behind systems, skills and financial products that can continue operating after donor-supported interventions end.
## A Test of Sustainability
The ₦61 billion facilitated through GP AgFin is one measure of the programme's scale.
The more consequential test will be whether the financial products, lending practices and institutional capacity developed during the eight-year programme remain active after its closure.
The project reported more than 101,000 farmers and agribusinesses reached, 150,300 financial transactions and 22 agricultural financial products developed and piloted.
Nineteen products were reported to have been permanently incorporated into partner institutions' portfolios, providing one indication that at least some of the intervention's mechanisms have moved beyond the project itself. :contentReference[oaicite:23]{index=23}
But sustaining those gains will require continuing demand from farmers, confidence from financial institutions and supportive economic conditions.
It will also require coordination among government agencies, banks, microfinance institutions, development-finance organisations, agricultural businesses and farmers' groups.
The CBN's latest intervention in the debate therefore points to a broader principle: agricultural finance is not simply a question of how much money enters farming.
It is a question of whether the entire production system is strong enough for borrowed capital to generate sustainable returns.
## The Road Ahead
As GP AgFin moves towards its October conclusion, the Nigerian agricultural-finance landscape is entering another phase.
The project has demonstrated one model for bringing farmers and financial institutions closer together.
Its reported results show that tailored products, financial education, digital delivery and better understanding of agricultural businesses can expand formal financial access.
At the same time, the CBN's warning makes clear that financial innovation cannot substitute for the physical and institutional foundations of productive agriculture.
Farmers still require roads that connect them to markets, storage facilities that protect harvests, research that improves productivity, technology that reduces costs, reliable market information and mechanisms for managing climate and price risks.
Financial institutions, meanwhile, require better information and lending models that enable them to assess agricultural enterprises according to their actual business cycles.
The next stage will therefore involve determining how these elements can work together.
The GP AgFin experience provides a body of evidence and a collection of financial products that stakeholders can build upon. Its reported ₦61 billion in financing and more than 101,000 beneficiaries show the scale that can be achieved when development partners and financial institutions work together.
But the CBN's message is that the broader challenge remains structural.
For Nigeria's agricultural sector, the objective is not merely to make more loans available.
It is to create conditions in which farmers can use finance productively, withstand production and market shocks, repay sustainably, expand their businesses and contribute to a stronger food system.
That will require agricultural finance to be treated as part of a wider economic ecosystem.
The end of GP AgFin will therefore not mark the end of the financing challenge.
Instead, it creates an opportunity for government, financial institutions and development partners to determine which of the programme's approaches can be scaled, which require modification and how they can be integrated into Nigeria's longer-term agricultural and financial architecture.
The central question going forward is straightforward: whether access to finance can be converted into lasting agricultural productivity and stronger rural businesses.
For Nigerian farmers, the answer will depend not only on the availability of credit, but on whether the roads, markets, technology, research, storage, information and financial systems surrounding that credit are strong enough to allow agricultural enterprises to succeed.
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