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Poor funding for agricultural research and inadequate infrastructure are among the structural challenges limiting access to finance for farmers and agribusinesses in Nigeria, according to the Central Bank of Nigeria (CBN).
Dr Michael Ononugbo, CBN Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, said the country’s agricultural finance gap goes beyond a shortage of capital and is linked to deeper weaknesses across the sector.
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.
Structural barriers continue to limit agricultural finance
The eight-year German-funded project, commissioned by Germany’s Federal Ministry for Economic Cooperation and Development and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), reached 101,449 farmers and agribusinesses across 10 states.
Speaking on the theme, “From Access to Impact: Embedding Agricultural Finance in Nigeria’s Economic Policy Architecture,” Ononugbo said smallholder farmers and rural enterprises operate under conditions that make conventional lending models difficult to apply.
He said farmers “often operate in environments characterised by fragmented landholdings, limited access to technology, weak infrastructure, inadequate storage facilities, climate-related vulnerabilities, and volatile commodity prices.”
These challenges, he added, are compounded by “limited financial records, insufficient collateral, and information asymmetries that make conventional lending models difficult to apply effectively.”
As a result, agricultural producers are “frequently underserved by formal financial institutions despite the strategic importance of the sector,” he said.
CBN calls for financing tailored to farmers’ realities
Ononugbo said successive agricultural finance policies had placed significant emphasis on expanding credit supply without paying sufficient attention to whether financing structures adequately reflected the realities of farmers and rural businesses.
“The challenge, therefore, is not merely the availability of finance but the effectiveness, appropriateness, and sustainability of financing arrangements,” he said.
According to him, financing that is “poorly structured, untimely, expensive, or disconnected from production realities may fail to improve productivity, and in some cases, may exacerbate the vulnerability of borrowers.”
This highlights the need for agricultural lending frameworks that take into account production cycles, climate risks, market volatility, collateral limitations and the broader operating conditions facing smallholder farmers.
Agricultural research funding remains a concern
The CBN official also raised concerns over the level of funding directed towards agricultural research and innovation, warning that inadequate investment could continue to constrain productivity and the development of new solutions for the sector.
“We must place greater emphasis on agricultural research and innovation. How much of the financing do we channel to research in agriculture? Innovative solutions and revolutionary practices will continue to elude us,” he said.
He stressed that sustained investment in agricultural research would be necessary to develop innovative practices, improve productivity and strengthen the sector’s capacity to respond to emerging challenges.
GP AgFin records growth in agricultural finance
Dr Andrea Rüdiger, Cluster Coordinator for GIZ’s Transformation of Agri-Food Systems programme, said the GP AgFin experience demonstrated that the agricultural financing gap could be reduced through appropriate financial tools and institutional support.
“GP AgFin Nigeria proved that the gap between farmers and finance can be closed. Today, we decide together what closing it at scale actually looks like,” Rüdiger said.
She called for lessons from the project to be incorporated into mainstream policy and financial institutions, including measures to strengthen compliance with the CBN’s agricultural lending target.
Rüdiger said the project expanded from 1,260 financial service users in 2020 to more than 101,000 by mid-2026, while loan disbursements increased from €776,000 in 2021 to €53.9 million.
The programme also supported 11 financial institutions in developing agricultural finance products, with 19 of the 22 products piloted now permanently integrated into partner institutions’ portfolios.
Women and youths remain underserved
Women accounted for 53 per cent of financial literacy trainees under the project, while women and youths continued to be identified among groups underserved by formal credit.
The project’s experience suggests that improving financial literacy and developing products suited to underserved groups could form part of broader efforts to deepen financial inclusion within Nigeria’s agricultural value chains.
As GP AgFin winds down in October 2026, its tools and partnerships are expected to transition into GIZ’s EU- and BMZ-co-funded Value Chain Enhancement programme.
Stakeholders said embedding the project’s lessons within national development and agricultural policy frameworks would be critical to sustaining progress and expanding access to appropriate agricultural finance beyond the intervention.
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