CBN Calls for Private Investment to Bridge Agricultural Financing Gap
The Central Bank of Nigeria has warned that public resources alone cannot satisfy the country’s agricultural financing requirements, urging a stronger private-sector role to close funding gaps, raise productivity and reinforce food security.
CBN Governor Olayemi Cardoso made the call on Tuesday in a keynote address at the National Stakeholder Roundtable on Strengthening Agricultural Credit Guarantees, held at Fraser Suites in Abuja. He was represented at the event by the Deputy Governor for Financial System Stability, Lamido Yuguda.
Cardoso said Nigeria requires sustainable financing arrangements capable of drawing in commercial investment while reducing the risks associated with agricultural lending. In his words, the scale of the country’s agricultural financing needs cannot be met by public resources alone, which is why guarantee mechanisms must be structured to achieve additionality — deploying public funds strategically to unlock far larger volumes of commercial and development finance.
A Shift Toward Market-Based Lending
The apex bank governor explained that the CBN is repositioning its development finance activities around market-based lending, greater private-sector participation and sustainable risk-sharing arrangements. He stressed that agricultural financing must be anchored on viable economic activities and sound lending decisions, while government institutions concentrate on correcting market failures and structural constraints.
Summarising the bank’s philosophy, Cardoso said the objective should be to crowd private capital in, not crowd it out.
Obstacles Holding Back Agricultural Credit
The governor identified several barriers that discourage financial institutions from extending adequate credit to farmers. These include climate-related risks, volatility in commodity prices, inadequate collateral, information gaps and the seasonal nature of production cycles.
According to Cardoso, agricultural credit guarantees must evolve beyond shielding lenders from defaults. He argued that guarantee arrangements should increasingly function as catalytic instruments that improve risk allocation, bolster lender confidence and unlock additional private capital for productive investment across agricultural value chains.
Four Priorities for Reform
Cardoso outlined four priorities for strengthening agricultural financing: improved institutional coordination, climate-risk management, digital transformation and the mobilisation of private capital. He called for closer collaboration among commercial banks, microfinance banks, insurers, development finance institutions and government agencies to reduce fragmentation and enhance credit delivery.
He also recommended embedding agricultural insurance, climate-risk mitigation and data-driven credit assessments into existing guarantee arrangements. On technology, the governor said modernising the Agricultural Credit Guarantee Scheme Fund would speed up processing and improve monitoring, transparency and credit-risk assessment. He reaffirmed that the CBN would continue to provide the monetary, regulatory and institutional environment needed to support sustainable agricultural investment.
Concern Over High Borrowing Costs
Earlier, the Chairman of the ACGSF Board, Dr Olusegun Oshin, raised concerns about high borrowing costs, warning that agricultural financing conditions often fail to reflect farmers’ production cycles. He described the high interest rate as an issue the board is examining closely, noting that farmers need affordable credit arrangements that allow them to recover production costs and earn reasonable profits.
Oshin disclosed plans to reposition the ACGSF from a traditional credit guarantee institution into a more responsive organisation capable of facilitating sustainable agricultural financing. He said the scheme’s ultimate ambition is not simply to issue more guarantees but to facilitate additional agricultural lending at affordable prices, strengthen lender confidence and improve farmers’ access to finance. He added that the scheme is exploring co-financing, refinancing, agricultural insurance and stronger institutional partnerships to improve credit availability.
Access to Credit Remains Difficult
In his welcome address, Dr Paul Oluikpe, Acting Director of the CBN’s Development Finance Advisory Department, said financing constraints continue to limit agricultural productivity and investment. He observed that access to credit remains difficult for many farmers and agribusinesses, while financing costs, repayment structures and collateral requirements often fail to reflect the realities of agricultural production.
Oluikpe noted that the ACGSF, established in 1977, requires continuous reform to remain effective amid changing market conditions and technological developments. He announced the unveiling of the scheme’s new brand identity and online portal, alongside the presentation of revised operational guidelines as an exposure draft for stakeholder feedback.
According to him, the two-day roundtable would also examine agricultural insurance, climate-risk management, private capital mobilisation and strategic partnerships. He said the success of the engagement would depend on practical recommendations, institutional collaboration and measurable improvements in agricultural credit delivery.
