CBN Blames Poor Funding, Infrastructure for Agric Lending Gap

The Central Bank of Nigeria has said poor funding for agricultural research and inadequate infrastructure are among the factors limiting access to finance for farmers. Dr Michael Ononugbo, Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, said the agricultural finance gap is rooted in structural weaknesses, not simply a shortage of capital.

Structural Weaknesses, Not Just Capital

Ononugbo spoke in Abuja at the National Close-Out Conference of the Global Project for the Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas, known as GP AgFin Nigeria. The eight-year German-funded project was commissioned by Germany’s Federal Ministry for Economic Cooperation and Development and implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit. It reached 101,449 farmers and agribusinesses across 10 states.

Speaking on the theme, 'From Access to Impact: Embedding Agricultural Finance in Nigeria’s Economic Policy Architecture,' Ononugbo said smallholder farmers and rural enterprises face challenges that make conventional lending difficult. He said farmers 'often operate in environments characterised by fragmented landholdings, limited access to technology, weak infrastructure, inadequate storage facilities, climate-related vulnerabilities, and volatile commodity prices.' He added that 'limited financial records, insufficient collateral, and information asymmetries that make conventional lending models difficult to apply effectively' compound the problem.

As a result, he said agricultural producers are 'frequently underserved by formal financial institutions despite the strategic importance of the sector.'

Policy Must Focus on Quality of Finance

Ononugbo said successive policies have focused too much on increasing credit supply without addressing whether financing suits farmers’ realities. 'The challenge, therefore, is not merely the availability of finance but the effectiveness, appropriateness, and sustainability of financing arrangements,' he said. He warned that financing that is 'poorly structured, untimely, expensive, or disconnected from production realities may fail to improve productivity and, in some cases, may exacerbate the vulnerability of borrowers.'

He also questioned the level of funding for agricultural research, saying inadequate investment is limiting innovation and productivity. 'We must place greater emphasis on agricultural research and innovation. How much of the financing do we channel to research in agriculture? Innovative solutions and revolutionary practices will continue to elude us,' he said. He said sustained investment in research is necessary to develop innovative solutions and improve productivity.

Project Results and What Comes Next

Dr Andrea Rüdiger, Cluster Coordinator for GIZ’s Transformation of Agri-Food Systems programme, said the GP AgFin experience showed the financing gap can be reduced through appropriate tools and institutional support. 'GP AgFin Nigeria proved that the gap between farmers and finance can be closed. Today, we decide together what closing it at scale actually looks like,' Rüdiger said. She called for the project’s lessons to be integrated into mainstream policy and financial institutions, including efforts to improve compliance with the CBN’s agricultural lending target.

She said the project grew from 1,260 financial service users in 2020 to more than 101,000 by mid-2026. Loan disbursements rose from €776,000 in 2021 to €53.9m. She said 11 financial institutions were supported to develop agricultural finance products, with 19 of the 22 products piloted now permanently integrated into partner institutions’ portfolios. Women accounted for 53 per cent of financial literacy trainees, while women and youths remained among groups identified as underserved by formal credit.

The project’s tools and partnerships are expected to transition into GIZ’s EU- and BMZ-co-funded Value Chain Enhancement programme as GP AgFin formally winds down in October 2026. Stakeholders said embedding the project’s lessons in national development and agricultural policy frameworks would be critical to sustaining access to finance beyond the intervention.

For Nigerian farmers and agribusinesses, the message is that more credit alone will not close the finance gap. The CBN’s own assessment points to infrastructure, research funding and loan design as the areas that need attention if agricultural lending is to support productivity and not just add debt.