Banks Raise Agriculture Lending to N3.86trn, But High Interest Rates Still Squeeze Farmers

News in Brief:

— Bank credit to Nigeria's agriculture sector rose to ₦3.86 trillion in March 2026, contrasting with lending to oil and gas, which declined.

— Despite this increase, farmers still face lending rates as high as 60%, with rising input costs continuing to outpace what many earn at harvest.

New data from the Central Bank of Nigeria (CBN) reveal that Nigerian banks increased lending to agriculture in the first quarter of 2026, rising to ₦3.86 trillion in March 2026.

The rise in agricultural lending comes as farmers continue to grapple with high borrowing costs, which leave many of them struggling to turn a profit even after a successful harvest.

It contrasts with the decline recorded in the oil and gas industry, creating a noticeable redirect in traditional bank credit flow.

Agric Credit on the Rise

According to the CBN's latest Quarterly Statistical Bulletin, agricultural credit climbed steadily through the first quarter of 2026. It hit ₦3.71 trillion in January and ₦3.81 trillion in February, before reaching ₦3.86 trillion in March. There was an increase of about ₦150 billion (4%) within three months.

The growth in farm lending stood in contrast to the trend in the oil and gas sector, which has traditionally taken the largest share of bank credit in Nigeria. Lending to oil and gas fell from ₦10.91 trillion in January to ₦10.58 trillion in March, a drop of about ₦335 billion.

The manufacturing sector's credit fell from ₦6.57 trillion in January to ₦5.77 trillion in March, reflecting the financing pressure many manufacturers face amid high borrowing costs.

Power and real estate, on the other hand, both recorded stronger inflows, with real estate credit rising sharply from ₦4.67 trillion to ₦6.29 trillion over the same period.

Overall, total sectoral private-sector credit rose from ₦57.41 trillion in January to ₦59.74 trillion in March, showing that banks reshuffled their lending across sectors even as total credit expanded.

What the Shift Means for Farmers

For a sector long held back by poor financing, insecurity, weak infrastructure and low mechanisation, the rise in agric lending is a welcome development. It could mean more capital reaching farmers, processors and other players along the agricultural value chain, at a time when food prices remain a major concern for households across the country.

However, more money flowing into the sector does not automatically translate to relief for farmers, many of whom still borrow at some of the highest interest rates in the economy.

In addition, this shift is unfolding against a difficult monetary backdrop. The CBN cut its benchmark Monetary Policy Rate (MPR) by 50 basis points to 26.5% in February and held it at that level in July. However, commercial lending rates remain elevated across the banking sector.

The Interest Rate Burden on Nigerian Farmers

While the rise in agric lending is encouraging on paper, it does not resolve one of the sector's oldest problems: the cost of borrowing.

CBN-published bank lending rate disclosures show just how steep that cost can be.

First Bank of Nigeria's prime lending rate stood at 26%, with a maximum rate of 38%. Access Bank's rates ranged from 25.5% to 32%, while Zenith Bank's ranged from about 23.6% to 32%. Guaranty Trust Bank's prime rate was around 21%, with a maximum of 32%. Stanbic IBTC's published range was among the widest, with a maximum lending rate reaching 60%, according to CBN data.

These rates sit well above the CBN's benchmark MPR of 26.5%, underlining how much more expensive credit remains for the average borrower, including farmers.

For many agriculture stakeholders, this means that even when loans are available, the cost of servicing them can wipe out already thin margins.

Reports from the 2025/2026 farming season point to a widening price-cost squeeze. Input costs for fertiliser, fuel, herbicides and labour rose sharply, in some cases more than doubling, while farmgate prices for staples such as maize, cassava and rice failed to keep pace.

Industry watchers say this mismatch between rising costs and stagnant or falling harvest prices, compounded by insecurity, poor storage infrastructure and post-harvest losses, continues to erode the benefits that increased bank lending is meant to deliver.

Unless borrowing costs come down meaningfully or targeted, single-digit agric financing windows are expanded, analysts say the recent uptick in bank credit to agriculture may do little to change the financial reality for the average Nigerian farmer.

Broader Credit Picture

Separate CBN monetary data show the wider economy also saw credit expansion. Private-sector credit under the broader measure rose from ₦75.24 trillion in January to ₦75.62 trillion in February, while net domestic credit increased from ₦109.43 trillion to ₦111.40 trillion.

Government borrowing climbed from ₦34.19 trillion to ₦35.77 trillion over the same period. This broader monetary measure is distinct from the sectoral lending figures above and should not be added to them.

Analysts say the trend of banks diversifying away from oil and gas toward agriculture, power, and real estate signals a gradual recalibration of Nigeria's credit landscape, as lenders seek growth outside the historically dominant energy sector.