Agriculture in Nigeria is pivotal to the country’s economy, contributing significantly to its GDP and employing a large number of people, especially in rural communities. 

Agricultural production from rural communities accounts for a significant percentage of the country’s overall food production. Despite the important role agriculture plays in the economy, boosting its GDP and employing a substantial portion of the workforce, access to agricultural credit for farmers, especially smallholder farmers, remains a persistent challenge. 

Without agricultural credit, farmers struggle to buy seeds, fertilisers, equipment, or manage post-harvest losses, which affects productivity, incomes, and rural development. 

As is the case with every business, access to credit goes a long way to aid productivity and overall output. 

This article highlights the available financing models available to farmers.

What are Agricultural Credits?

Agricultural credit refers to the credit vehicles used to finance agriculture, typically in the form of loans, notes, bills of exchange, and bankers’ acceptances. These financial services or loans provide aid to the overall productivity of farmers and agribusinesses. 

The financing is created to meet the financial needs of farmers, enabling them to secure equipment, plant, harvest, and market their products, as well as cover other necessary expenses to keep their farms operational.

What are the agricultural credits available for Nigerian farmers?

Finance Minister Wale Edun highlighted that efficient financing, mechanisation, and strategic commodity storage are key to enhancing productivity and ensuring price stability, affirming that government-led financing initiatives support large numbers of farmers to boost national food security and economic stability. 

Agricultural credits available for Nigerian farmers primarily stem from government-backed schemes to provide access to affordable funding for both smallholder and commercial farmers. 

Some include:

1. Bank of Agriculture (BOA): The Bank is owned by the Federal Government of Nigeria and was established to provide agricultural credit facilities that support all agricultural value chain activities through the cooperative development of an agricultural information system, as well as the provision of technical support and financial advisory services. The Bank provides Agricultural credit finance to support rural savings and Micro, Small and Medium Enterprises (MSMEs).

2. Agricultural Credit Guarantee Scheme Fund (ACGSF): The Agricultural Credit Guarantee Scheme Fund (ACGSF) was created by Decree No. 20 of 1977 and became operational in April 1978. It encourages banks to lend to farmers by guaranteeing up to 75% of loans in case of default. It covers crop production, animal husbandry, agro-processing, and farm equipment financing. 
3. Commercial Agriculture Credit Scheme (CACS): The Commercial Agriculture Credit Scheme was introduced on February 18, 2009, to promote commercial agricultural enterprises in Nigeria. The objectives of the Scheme are to fast-track the development of the agricultural sector by providing credit facilities to commercial agricultural enterprises at a single-digit interest rate, enhance national food security through increased output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.
4. Anchor Borrowers’ Programme (ABP): The Anchor Borrowers’ Programme is managed by CBN and links smallholder farmers with processing companies by providing inputs, extension services, and loans that are repayable in produce. This program enhances access to finance and markets simultaneously.
5. Nigeria Incentive-Based Risk Sharing System for Agricultural Lending(NIRSAL): NIRSAL  is a non-bank financial institution wholly owned by the CBN, and specialises in Agricultural risk management, finance facilitation and agribusiness project development. NIRSAL redefine, dimensions, measures, re-prices, and shares agribusiness-related credit risks in Nigeria.
6. Private Fintech and Agritech Platforms: Private agritech platforms such as ThriveAgric, Farmcrowdy, offer small-scale farmers microloans, including training, insurance, and market access services to ensure better credit utilisation and reduce risks.

Farmcrowdy uses technology to connect stakeholders with easy access to aggregate farm produce, inputs, and processed food. To deliver premium value to stakeholders in the food value chain. 

Thrive Agric empowers smallholder farmers across Africa by linking them to finance, data-driven best practices, and access to local and global markets for their commodities, towards ensuring food security for all.

What Are the Ways Farmers Can Access Agricultural Credit?

Farmers can follow these steps to access Agricultural credit:

• Join a Cooperative Society: Credit programs, such as Bank of Agriculture (BOA) loans and the Anchor Borrowers’ Programme (ABP), require applicants to be members of cooperatives or farmer groups. This aids easier loan disbursement, promotes collective responsibility, and strengthens bargaining power.
• Register with a Farmers’ Association: Being part of recognised associations, such as Rice Farmers Associations, helps prove legitimacy and eligibility for credit schemes and technical support.
• Apply through Banks or Microfinance Institutions (MFIs): Farmers can visit commercial banks, microfinance banks, or specialised institutions like the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) National Microfinance Bank (NMFB) to apply for loans.
• Apply via Online Portals: Platforms like NIRSAL accept online applications for various agricultural loans, making the application process more accessible and eliminating location barriers.
• Other basic requirements include valid Identification (ID), Proof of land ownership or tenancy, a business plan or farming experience, a guarantor, and collateral.

What are some challenges faced by farmers in accessing credit?

Many Nigerian farmers struggle to access credit due to:

1. Lack of Collateral

2. High Interest Rates

3. Bureaucracy and Delays

4. Limited Financial Literacy

5. Gender Discrimination

6. Poor Infrastructure

To fully realise the immense potential of Nigeria’s agricultural sector, farmers need to have access to affordable credit and valuable information. 

AgroCentric provides simplified access to credit opportunities, financial products, market data, and agronomic insights, empowering farmers to make well-informed decisions. 

In essence, agricultural credit is crucial for Nigeria’s food security and economic growth. The path to inclusive financing relies on government-supported initiatives, private-sector innovations, and digital platforms to ensure that farmers receive the support they need. By strengthening these systems, we can enhance productivity, improve rural livelihoods, and foster sustainable agricultural development throughout Nigeria.