Written by Nine out of every ten commercial banks in Nigeria will not lend to the agricultural sector, the President of the All Farmers Association of Nigeria (AFAN), Mr. Mohammed Magaji, has said, warning that the gap is pushing the country toward a food financing crisis even as government programmes designed to bridge it sit largely unused.
Mr. Magaji’s assessment is stark and on the record.
“About 90 per cent of the commercial banks don’t want to lend to agriculture. At all, they don’t want to go into agriculture,” he said.
He said the problem runs deeper than bank reluctance. Farmers themselves cannot meet the conditions lenders impose.
“We cannot meet up with the collateral. The stringent conditions that the commercial banks are putting in place, I don’t think it’s easy to come by. I don’t think it’s easy to be fulfilled by Nigerian farmers.”
The Agricultural Credit Guarantee Scheme Fund (ACGSF), established by the Federal Government and managed by the Central Bank of Nigeria (CBN), was created precisely to solve this problem.
Under the scheme, the government guarantees up to 75 per cent of the value of agricultural loans in default, designed to reduce the risk that keeps banks out of the sector. The scheme’s share capital was increased from N3 billion to N50 billion in 2019 to deepen its reach.
At the inauguration of the ACGSF’s newly constituted board in December 2025, CBN Governor Mr. Yemi Cardoso acknowledged the failure plainly: agriculture contributes more than a fifth of Nigeria’s GDP and employs a large share of the workforce, yet it receives less than five per cent of total bank lending.
“This longstanding financing gap is no longer acceptable,” he said.
The guarantee has not moved the banks. Mr. Magaji was direct about why: the ACGSF does not disburse money to farmers. It only guarantees what commercial banks choose to lend.
“ACGSF is not the one giving the money; they are only guaranteeing. That’s why they call it the Agricultural Credit Guarantee Scheme Fund. So the commercial banks are not willing.”
The economics make the banks’ position understandable, even as it makes the policy outcome unacceptable. Mr. Magaji named the second problem himself: farm produce prices are currently low.
“If you collect N100 million today, or just N5 million and invest in agriculture, how much are you going to sell your products to get your money back and pay the loan?” he said.
Low produce prices, inadequate storage infrastructure, and the absence of reliable off-taker agreements mean that even a farmer who accesses credit faces a real risk of inability to repay. The banks price that risk correctly. The farmers pay the consequences.
Mr. Cardoso said smallholder farmers, who make up about 80 per cent of Nigeria’s farmers and account for roughly 90 per cent of the nation’s food production, continue to face high barriers to credit due to lack of collateral, limited records, and perceptions of high risk.
He called on the new ACGSF board to work with microfinance institutions, cooperatives, and fintech firms to design products that reach underserved farmers through group lending, mobile money, and agent banking.
The stakes behind these conversations are not abstract. The FAO has warned that about 34.7 million Nigerians could face severe food insecurity during the lean season running from June to August 2026 (EnviroNews) , the period that begins in six weeks. The lean season is precisely when farmers most need working capital to plant and maintain crops, and precisely when they are least able to access it.
Whether the reconstituted ACGSF board can move commercial banks in time to matter for this planting cycle is the question. The guarantee has existed since 1978. The banks have been unwilling for most of those years. What changes that, Mr. Cardoso has said, is not the guarantee itself but who designs the products and who delivers them. Fintech and cooperatives are now in the official mandate. Whether they can reach 80 per cent of farmers before the lean season deepens is the real test.
Source: Punch Newspapers. CBN Governor’s address at ACGSF board inauguration, December 2025. News Agency of Nigeria (NAN). FAO Nigeria food security projections, 2026.
