Nigeria's public resources are insufficient to meet the country's agricultural financing needs, the Central Bank said on Tuesday, calling for substantially greater private-sector investment to address funding shortages and strengthen food security. CBN Governor Olayemi Cardoso, speaking through Deputy Governor Lamido Yuguda at the National Stakeholder Roundtable on Strengthening Agricultural Credit Guarantees in Abuja, said guarantee mechanisms must be designed to unlock commercial and development finance using public resources strategically. "The scale of Nigeria's agricultural financing needs cannot be met by public resources alone," Cardoso said in his keynote address. "Guarantee mechanisms must therefore be designed to achieve additionality, using public resources strategically to unlock substantially greater volumes of commercial and development finance."
The CBN said it was repositioning its development finance activities towards market-based lending, increased private-sector participation and sustainable risk-sharing arrangements. According to Cardoso, agricultural financing must be driven by viable economic activities and sound lending decisions, while government institutions focus on addressing market failures and structural constraints. He identified climate-related risks, commodity price volatility, inadequate collateral, information gaps and seasonal production cycles as major obstacles preventing financial institutions from extending sufficient credit to farmers. "Our objective should be to crowd private capital in, not crowd it out," the governor said.
Cardoso outlined four priorities for strengthening agricultural financing: improved institutional coordination, climate-risk management, digital transformation and private capital mobilisation. He advocated integrating agricultural insurance, climate-risk mitigation and data-driven credit assessments into existing guarantee arrangements, and called for stronger collaboration among commercial banks, microfinance banks, insurers, development finance institutions and government agencies. The governor said modernising the Agricultural Credit Guarantee Scheme Fund would improve processing speed, monitoring, transparency and credit-risk assessment.
The Chairman of the ACGSF Board, Dr Olusegun Oshin, expressed concern over high borrowing costs, warning that agricultural financing conditions often failed to reflect farmers' production cycles. Oshin said the scheme planned to reposition from a traditional credit guarantee institution into a more responsive organisation capable of facilitating sustainable agricultural financing. The scheme is exploring co-financing, refinancing, agricultural insurance and stronger institutional partnerships to improve credit availability. The CBN's Acting Director of Development Finance Advisory, Dr Paul Oluikpe, said the ACGSF, established in 1977, required continuous reforms to remain effective amid changing market conditions.