NADF Refines Non-Interest Finance Plan to Expand Farmer Funding

News in Brief:

— NADF has begun validating a new non-interest finance framework designed to widen funding options for Nigerian farmers and agribusinesses.

— The move builds on the agency's blended finance initiative and is part of a broader push to draw private capital into agriculture.

The National Agricultural Development Fund (NADF) is perfecting a new non-interest finance framework to widen how Nigerian farmers and agribusinesses access funding.

At a Strategic Roundtable and Validation Session in Abuja, NADF began validating its proposed Non-Interest Finance Framework and Guidelines, which is expected to open ethical, asset-backed financing options to more players across the agriculture value chain.

Speaking at the event, the agency's Executive Secretary, Mohammed Ibrahim, explained that the initiative will ensure farmers, agribusinesses and other value-chain actors have access to diverse and innovative financing options, as part of the Federal Government's food security objectives.

Ibrahim remarked that non-interest finance has become an important part of Nigeria's financial system, offering ethical, asset-backed and risk-sharing models that complement conventional financing.

"Our objective is not simply to introduce another financing framework. It is to broaden the financing ecosystem for agriculture by ensuring that every credible financing option is available to Nigerian farmers, agribusinesses and other value-chain actors," he said. "The proposed framework will provide a structured and transparent basis for delivering agricultural interventions through licensed Non-Interest Financial Institutions while institutionalising governance, operational and Shari'ah compliance standards."

He described the framework and guidelines as drafts, deliberately put forward for stakeholders to scrutinise and improve before they are finalised. "Today's gathering marks an important milestone in that journey. I urge participants to examine the draft documents critically, challenge assumptions where necessary and share practical experiences," Ibrahim declared.

How the NADF Non-Interest Finance Framework Works

NADF's Head of Investment, Olalekan Alabi, said the framework and accompanying guidelines will establish a structured mechanism for deploying non-interest financing to eligible agricultural activities and value-chain interventions.

According to him, the framework provides the institutional and operational architecture for NADF's non-interest finance activities, covering governance, institutional responsibilities, financing approaches, risk management, compliance and controls. Meanwhile, the guidelines translate these principles into practical procedures for implementing specific financing interventions.

"Together, the Framework and Guidelines are expected to provide clarity on how NADF's non-interest financing interventions will be structured, assessed, approved, implemented, monitored and reported," Alabi said.

He explained that the validation exercise covers the framework's institutional architecture, financing structures, risk management, Shari'ah and regulatory considerations, and its overall practicality.

"The validation session is an opportunity to test whether the proposed framework can work effectively in practice. We are here to test their technical robustness and practical applicability," he added.

What Stakeholders Say About the Move

Speaking at the session, Dr Paul Oluikpe, Director of the Central Bank of Nigeria's (CBN) Development Finance Advisory Department, said significant work remains to improve access to agricultural finance in Nigeria, even as he welcomed the proposed framework for bringing an often-overlooked dimension of agricultural financing into the mainstream.

"The scale of Nigeria's agricultural financing needs remains enormous, considering the country's population, the importance of agriculture to the economy and the challenges across the sector," Oluikpe said, noting that the CBN was involved in the fund's early development.

He said the Federal Government's food security objective has made institutions like NADF important in mobilising resources and closing gaps in agricultural finance, as the CBN has moved away from direct developmental interventions.

Prof. Bashir Umar, Deputy Chairman of the CBN's Financial Regulation Advisory Council of Experts (FRACE), added that the proposed framework aligns with ongoing efforts to promote financial inclusion in Nigeria, noting that several development finance institutions have introduced or are considering similar non-interest finance windows.

"What we are witnessing at the moment is also following this trajectory of financial inclusion and easy access to finance and having a level playing field and even developmental perspective for the whole country whereby no segment of society is left out," Umar said.

He further added that non-interest financing can complement existing mechanisms and help mobilise resources for agriculture, a sector that employs a significant share of Nigerians.

If rolled out successfully, the framework could give farmers who avoid interest-based loans a formal route into structured agricultural financing, widening the pool of Nigerians the sector can draw capital from.

NADF's Broader Push for Capital

The non-interest finance framework is the latest in a string of moves by NADF this year to widen funding sources for Nigerian agriculture beyond direct government spending.

In June, the fund launched a blended finance initiative in Lagos with Convergence Blended Finance to draw private and institutional capital into agribusiness by lowering investment risk. The initiative, unveiled through the newly established NADF Agribusiness Finance Lab under the agency's 2026 Action Plan, followed stakeholder consultations that found large pools of development and concessional capital sitting idle due to gaps in risk assessment and investment structuring.

NADF said it is positioning itself as a convener linking capital providers, agribusiness operators and technical experts, rather than a direct financier competing with banks and development finance institutions.