Nigeria’s agricultural sector is responsible for the employment of a significant portion of the country’s population, yet access to finance is one of the biggest challenges Nigerian farmers encounter. Agriculture contributes nearly one-quarter of the country’s Gross Domestic Product. However, one of the primary challenges faced by Nigerian farmers is limited access to finance, which hinders their productivity and growth.

In a notable shift towards enhancing the agricultural landscape, Nigeria’s 2025 budget allocates ₦826.5 billion to agriculture, indicating a significant change focused on boosting the sector, enhancing food security, and creating substantial employment compared to the budget allocation of previous years.

Additionally, Innovative financing options, including crowdfunding and microloans, are now available to Nigerian farmers. These financial solutions provide new avenues for accessing capital, enabling farmers to expand their operations, acquire essential equipment, and increase their inputs effectively.

Why Do Farmers Need Innovative Financing?

Farmers face numerous challenges in accessing finance. According to Onyeka Akumah, co-founder of Crowdyvest and Farmcrowdy, the major reason farmers require innovative financing is to overcome the financial exclusion they face. Traditional banks often view smallholder farmers as high-risk and require collateral, which many smallholder farmers and traders are unable to provide, leading to limited access to credit. Because agriculture is characterised by seasonality and irregular cash flows,  this makes it difficult for farmers and traders to meet the fixed repayment schedules of traditional loans. 

Many farmers also lack knowledge of financial management, making it difficult for them to navigate the complexities of formal financing systems. Furthermore, funding delays can affect planting seasons, reduce yield, and affect food security.

Innovative Ways Nigerian Farmers can Get Financial Support for their Agribusinesses

Here are some innovative ways Nigerian farmers can get financial support:

Crowdfunding

Crowdfunding in Agriculture is an innovative financing solution for farmers where companies raise funds for agricultural activities directly from the market. These companies appeal to retail investors on behalf of the farmers, and then pool individual contributions into a larger investment fund that they make available to agriculture companies. They aim to boost food production and sustainability by providing the necessary tools and technology for small-scale farmers and agribusinesses to increase food production with lower production costs, better yields, and more innovative marketing.

Examples of Crowdfunding Platforms in Nigeria

• FarmCrowdy: This agritech company was founded by Kenneth Okonkwo and co-founder Tope Omotolani. FarmCrowdy was launched in 2016 to address the financial challenges faced by these farmers in accessing Nigeria’s financial market. By connecting small-scale Nigerian farmers with sponsors, Farmcrowdy is playing a pivotal role in revolutionising the agriculture sector.
• ThriveAgric: ThriveAgric is a leading Nigerian agricultural technology company that empowers smallholder farmers by providing them with access to finance, data-driven best practices, and connections to local and global markets. The company’s mission is to build Africa’s largest network of profitable and productive farmers, ensuring food security for all.
• AgroMall: AgroMall is a digital agricultural platform that uses technology and data to enhance farm production and market participation. They focus on creating connected and thriving agricultural and food-producing communities.

Microloans

Another innovative financing solution available to Nigerian farmers is Microloans. Microloans are small, low-interest loans designed to help individuals or groups without access to traditional banking systems. 

Unlike conventional loans, microloans are often more accessible, requiring little to no collateral and catering specifically to underserved rural areas. This makes them particularly suited to farmers who operate on small plots of land, aiming to expand their operations. These loans are often provided by microfinance banks, cooperatives, or NGOs. 

Here are some institutions providing microloan support to Nigerian farmers:

• FAST Microfinance Bank: FAST Microfinance Bank offers “Agric Loans” for various farming activities, including crop growing, fishing, and animal husbandry.
• Bank of Agriculture (BOA): Bank of Agriculture is a specialised development finance institution that provides credit facilities to farmers and agricultural value chain players.
• Unity Bank: Unity bank offers a “Unity Farmers’ Cooperative Finance Scheme” specifically for registered cooperative societies.
• Nigeria Farmers Alliance (NFA): Operates the “Operation Fund the Farmers (OFF)” initiative, which offers interest-free loans with only a minimal administrative fee.
• Babban Gona: An innovative social enterprise that provides a unique technology platform and program to make farming more profitable for smallholder farmers, including providing loans for inputs.

These loans are mainly easier to access  as a result of reduced red tapism making them suitable for smallholder farmers. This also fosters inclusion for minority groups and women and youth. 
What Farmers Need to Know/Have Before Getting a Loan

While requirements vary, farmers generally need to prepare and have the following before applying for a microloan:

1. A Farm Business Plan: Even for a small-scale operation, having a clear plan is crucial. This includes detailing the type of farming, the expected yield, and how the loan will be used and repaid.
2. Verifiable Farming Evidence: Lenders need to confirm that you are a practising farmer. This can be demonstrated with:
   • Proof of land ownership or a verifiable lease agreement.
   • Photos of your farm or livestock.
   • An endorsement or a letter from a local cooperative or community leader.
3. Basic Identification and Personal Information:
   • A valid national ID (e.g., National ID Card, Voter’s Card, or Driver’s License).
   • A Bank Verification Number (BVN) is used to verify a person’s credit history.
   • A verifiable residential address.
   • A valid bank account.
4. Membership in a Cooperative or Group: Many microloan schemes, particularly those from large banks or government-backed programs, prefer to lend to farmers who are organised in groups or cooperatives. This peer system often serves as a form of collateral and social accountability.
5. Understanding of Loan Terms: Farmers must understand the loan’s key features, including:
   • Interest Rate: The percentage charged on the loan.
   • Tenor: The duration of the loan (e.g., 6, 12, or 24 months), which is often tied to the gestation period of the crop or livestock.
   • Repayment Schedule: When and how repayments are to be made (e.g., daily, weekly, or at harvest).
   • Collateral/Guarantors: While many microloans are unsecured, some may require a third-party guarantor or even a group guarantee.
6. A Good Credit History: Lenders will often run a credit check to assess your reliability. It’s essential to have no outstanding loan obligations with other financial institutions.

Innovative financing  like crowdfunding and microloans are revolutionising access to capital for farming in Nigeria. As a result, a growing number of  Nigerian farmers can transition from small-scale to largescale farming which will serve in transforming lives and communities across the country.

By empowering these farmers, we witness a ripple effect that improves livelihoods, creates job opportunities, and fosters sustainable agricultural practices across the country.