Poor infrastructure and inadequate funding for agricultural research are limiting farmers’ access to finance in Nigeria, the Central Bank of Nigeria (CBN) has said.
Michael Ononugbo, CBN deputy director and special assistant in the office of the deputy governor, economic policy directorate, said the country’s agricultural financing challenge went beyond the availability of credit.
According to him, structural problems affecting farmers and rural businesses make it difficult for conventional lending models to work effectively.
Ononugbo identified fragmented landholdings, limited access to technology, poor infrastructure, inadequate storage facilities, climate-related risks and volatile commodity prices among the factors affecting agricultural producers.
He also cited inadequate financial records, insufficient collateral and information gaps as barriers to formal lending.
“The challenge, therefore, is not merely the availability of finance but the effectiveness, appropriateness, and sustainability of financing arrangements,” he said.
He spoke at the Global Project for the Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas (GP AgFin Nigeria) national close-out conference in Abuja.
Ononugbo said greater attention should also be given to funding agricultural research and innovation.
He argued that inadequate investment in research was restricting the development of new technologies and practices capable of improving productivity.
“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.
The CBN official said financing would have limited impact if other constraints affecting agricultural production were not addressed.
He warned that loans that are poorly structured, expensive, untimely or disconnected from farmers’ production cycles could fail to improve productivity and potentially increase borrowers’ vulnerability.
The GP AgFin Nigeria project, an eight-year German-funded initiative implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), reached 101,449 farmers and agribusinesses across 10 states.
Andrea Rüdiger, cluster coordinator for GIZ’s Transformation of Agri-Food Systems programme, said the project showed that the financing gap could be reduced through appropriate financial products 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,” she said.
Rüdiger said the programme grew from 1,260 financial service users in 2020 to more than 101,000 by mid-2026.
Loan disbursements also increased from €776,000 in 2021 to €53.9 million, she said.
The project supported 11 financial institutions to develop agricultural finance products, with 19 of the 22 products piloted now permanently integrated into the institutions’ portfolios.
Women accounted for 53 per cent of participants who received financial literacy training under the programme.
The GP AgFin Nigeria project is expected to formally wind down in October 2026.
Its tools and partnerships are expected to transition to GIZ’s EU- and BMZ-co-funded Value Chain Enhancement programme.