Poor Credit Access Stunts Agribusiness Growth in Nigeria

News in Brief:

-Experts urge the government and private investors to reform agricultural financing and improve access to credit for smallholder farmers.

-Blended finance, zero-interest loan schemes, and fintech-driven tools could help boost productivity and strengthen Nigeria’s food security.

Many farmers across Nigeria still rely on informal lending systems due to the difficulty of securing bank loans. Traditional banks often demand high collateral and short repayment cycles, leaving thousands of producers unable to afford improved seeds, fertilisers, or mechanisation services.

Stakeholders say this situation continues to trap farmers in low-productivity cycles. Despite producing most of Nigeria’s food, smallholders face high interest rates, weak collateral systems, and poor risk-sharing frameworks.

The Missing Link in Agricultural Reform

According to Dr Ayoola Oduntan, President of the Feed Industry Practitioners Association of Nigeria (FIPAN), formal credit for agriculture is 'extremely' limited when compared to need. It trickles down to restricted input access, mechanisation, storage, and scaling.

He suggested that both the government and the private sector can double the credit flow to productive agriculture within five years through blended finance —a mix of public and private funding. He also urged the government to expand risk-sharing facilities, provide credit guarantees, and direct Central Bank incentives toward viable value chains rather than short-term subsidies.

Oduntan added that private investors and fintech companies should promote tools such as invoice financing, warehouse receipts, and pay-as-you-harvest loan systems linked with mobile payments. Expanding crop and weather insurance, he said, would encourage banks to lend more confidently to farmers.

Rethinking Agricultural Policy and Investment

Aolat Idowu-Agbelekale, CEO of Arcom Treasures, believes innovative financing models like contract farming, zero-interest loan schemes, and cooperative-based investments could bridge the credit gap for smallholders. She emphasised the need for consistent and result-oriented government policies and private investment in research, farm settlements, and modernised farming.

Similarly, Sulaiman Taofeek, a poultry stakeholder, called for dedicated agricultural microfinance banks and targeted low-interest schemes. “If farmers can access affordable loans and fair repayment plans, they’ll produce more and attract young people into agriculture,” he said.

Using Data to De-risk Agricultural Finance

Austine Adeniba, COO of Eliakim Integrated Services Limited, highlighted that using reliable data, such as digital farm mapping, could serve as collateral to boost lending confidence. “This will make it easier for farmers without land titles to access finance, while helping banks better assess risks,” he explained.

Experts agree that sustainable agricultural financing must go beyond funding inputs. It should also strengthen storage, logistics, and value chain integration to minimise post-harvest losses and raise farmers’ income.