The Central Bank of Nigeria (CBN) has called for increased private-sector investment in agriculture, warning that public funds alone cannot meet the country’s growing financing requirements.
The apex bank said greater investment was necessary to bridge funding gaps, boost agricultural productivity and strengthen food security.
CBN Governor, Olayemi Cardoso, made this known on Tuesday in his keynote address at the National Stakeholder Roundtable on Strengthening Agricultural Credit Guarantees, held at Fraser Suites, Abuja.
Cardoso, who was represented by the Deputy Governor in charge of Financial System Stability, Lamido Yuguda, said Nigeria required sustainable financing frameworks capable of attracting commercial investments while minimising the risks associated with agricultural lending.
“The scale of Nigeria’s agricultural financing needs cannot be met by public resources alone. Guarantee mechanisms must therefore be designed to achieve additionality, using public resources strategically to unlock substantially greater volumes of commercial and development finance,” he said.
He explained that the CBN was restructuring its development finance operations to encourage market-driven lending, expand private-sector involvement and establish sustainable risk-sharing mechanisms.
According to him, agricultural funding should be based on viable business activities and responsible lending decisions, while government institutions should concentrate on resolving market failures and structural challenges.
“Our objective should be to crowd private capital in, not crowd it out,” Cardoso said.
The CBN governor identified climate-related challenges, fluctuations in commodity prices, inadequate collateral, information gaps and seasonal farming cycles as some of the major factors discouraging financial institutions from providing sufficient credit to farmers.
He stressed that agricultural credit guarantee schemes should go beyond protecting lenders from loan defaults and focus on attracting additional investments across the agricultural value chain.
“The future of agricultural credit guarantees must therefore go beyond protecting lenders against default. Guarantee arrangements should increasingly serve as catalytic instruments that improve risk allocation, strengthen lender confidence and unlock additional private capital for productive investment across agricultural value chains,” he said.
Cardoso highlighted four key areas for improving agricultural financing: stronger institutional coordination, climate-risk management, digital transformation and increased mobilisation of private capital.
He called for improved cooperation among commercial banks, microfinance banks, insurance companies, development finance institutions and government agencies to address fragmentation and enhance access to credit.
He also recommended incorporating agricultural insurance, climate-risk reduction measures and data-driven credit assessments into existing guarantee frameworks.
On digital innovation, Cardoso said upgrading the Agricultural Credit Guarantee Scheme Fund (ACGSF) would enhance transaction processing, monitoring, transparency and credit-risk evaluation.
He reaffirmed the CBN’s commitment to maintaining the monetary, regulatory and institutional framework required to promote sustainable investments in the agricultural sector.
Earlier, Chairman of the ACGSF Board, Dr Olusegun Oshin, raised concerns over the high cost of borrowing, noting that existing agricultural financing arrangements often failed to accommodate farmers’ production cycles.
“That high interest rate is an issue, and it’s something that we are looking at considerably,” he said.
Oshin stressed the need for affordable lending arrangements that would enable farmers to recover their production expenses while making reasonable profits.
He also revealed plans to transform the ACGSF from a conventional credit guarantee institution into a more responsive organisation focused on supporting sustainable agricultural financing.
“Our ultimate ambition is not simply to issue more guarantees, but to facilitate additional agricultural lending at affordable prices, strengthen lender confidence, improve farmers’ access to finance,” he said.
He added that the scheme was considering co-financing, refinancing, agricultural insurance and stronger institutional partnerships as strategies to expand access to agricultural credit.
In his welcome address, the Acting Director of the CBN’s Development Finance Advisory Department, Dr Paul Oluikpe, said limited access to financing remained a major obstacle to agricultural productivity and investment.
“For many farmers and agribusinesses, access to credit remains difficult, while financing costs, repayment structures and collateral requirements often fail to reflect the realities of agricultural production,” he said.
Oluikpe noted that the ACGSF, established in 1977, needed regular reforms to remain relevant amid evolving market conditions and technological advancements.
He announced the introduction of the scheme’s new brand identity and online portal, alongside the presentation of updated operational guidelines in an exposure draft for stakeholders to review and provide feedback.
According to him, the two-day stakeholder engagement would also examine agricultural insurance, climate-risk management, private-sector investment and strategic partnerships.
He said the success of the meeting would be measured by the practical recommendations generated, stronger institutional cooperation and tangible improvements in agricultural credit delivery.
