CBN orders Agric Fund Board to widen credit access to farmers

The Central Bank of Nigeria (CBN) has charged the newly inaugurated Board of the Agricultural Credit Guarantee Scheme Fund (ACGSF) to ensure that lack of collateral or remote location no longer prevents Nigerian farmers from accessing credit.

The Governor of the CBN, Mr. Olayemi Cardoso, gave the charge in Abuja during the inauguration ceremony, describing the Scheme as a critical institution that must evolve to meet the financing needs of modern agriculture.

The 48 years old ACGSF is one of Nigeria’s foremost and longest-standing development finance programmes, with a rich history in our socio-economic journey. It is not the CBN going back to interventions in some sectors but a continuation of the apex bank’s statutory mandate which recognises ACGSF.

Cardoso said the core objective going forward is to make agricultural credit more accessible and inclusive. According to him, “our goal should be that a lack of collateral or remote location is no longer an insurmountable barrier to financing.” He described agriculture as central to Nigeria’s economic structure, pointing out that despite its contribution to national output and employment, credit to the sector remains very low.

“Agriculture remains the backbone of our economy, contributing over one-fifth of Nigeria’s GDP and employing nearly two-thirds of our working population. Yet, paradoxically, it receives only a small fraction of formal credit – less than 5 percent of banks’ lending goes to the agricultural sector,” he said.

The CBN Governor said the 48-year-old ACGSF was established to reverse this trend, noting that it remains one of Nigeria’s most enduring development finance tools. “It is not the CBN going back to interventions in some sectors but a continuation of the apex bank’s statutory mandate which recognises ACGSF,” he said.

Cardoso urged the Board to ensure that the Scheme becomes a reliable partner for farmers seeking financing. “Every hardworking farmer with a viable project should find in the ACGSF an enabling partner that helps them access the robust support they need to grow their enterprise,” he said.

He stressed the need for stronger monitoring mechanisms to track the impact of guaranteed loans, noting that the era of disbursing funds without verifiable outcomes must end. “It is essential to institute a framework for tracking the impact of guaranteed loans on agricultural productivity and farmers’ welfare. This Board should champion the use of data and technology for real-time monitoring of projects supported under the Scheme,” he said.

According to him, leveraging tools such as satellite imagery to track crop progress and digital dashboards to monitor loan disbursements would improve transparency and accountability. “Regular oversight will ensure that loans guaranteed by the Fund are being used for their intended purposes and are yielding positive results,” he added.

Cardoso also said that proper evaluation will help the Board identify emerging risks such as regional loan defaults and respond proactively through borrower support or adjustments in the Scheme’s approach. He asserted that sound evidence of increased output, higher farm incomes, and better food security is necessary for policy decisions that will strengthen the Fund’s operations.

He described the inauguration of the Board as timely, noting that Nigeria must urgently bridge its lingering agricultural financing gap. “This longstanding financing gap has constrained the potential of millions of Nigerian farmers. The inauguration of this Board, therefore, comes at an opportune time as we embark on a bold new chapter in agricultural finance,” he said.

Reviewing the Scheme’s legal foundation, Cardoso stated that “since its establishment by Decree No. 20 of 1977, the Agricultural Credit Guarantee Scheme Fund has played a vital role in de-risking agricultural lending and encouraging financial institutions to extend credit to farmers and agribusinesses.” He noted that by guaranteeing up to 75 per cent of agricultural loans, the Fund has enabled banks to lend to categories of farmers that would ordinarily have been excluded.

However, he stated that the complexities of today’s agricultural landscape require the Scheme to be more dynamic. “Modern agriculture is far more complex – characterized by extensive value chains, advanced technologies, climate and security risks, and stakeholders ranging from smallholder cooperatives to agritech startups. We must therefore reposition the ACGSF as a dynamic, forward-thinking scheme capable of addressing these complexities,” he said.

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The CBN Governor recalled that a 2019 amendment expanded the Scheme’s share capital from N3 billion to N50 billion, placing it on stronger footing. He commended the Board’s broader composition, noting that the law now provides for a representative of Nigerian farmers. “Such inclusivity is strategic; it enshrines partnership between policymakers, financiers, and the farming community in guiding the Scheme’s activities,” he said.

Cardoso said Nigeria’s agricultural sector sits at “the crossroads of unprecedented opportunity,” aligning with the Federal Government’s Renewed Hope agenda to build a resilient, technologically advanced, and inclusive agricultural economy. Achieving this vision, he said, requires dismantling long-standing barriers to credit access, especially for smallholder farmers who produce the bulk of Nigeria’s food.

“Many lack collateral or credit history and are perceived as high-risk by conventional lenders. This is a structural anomaly we can no longer afford, given that these same smallholders feed our nation and drive our rural economy,” he said.

He called on the ACGSF to play a transformative role in making agricultural credit more affordable and impactful. According to him, the Scheme must catalyse investments in modern inputs, irrigation, mechanisation, storage, processing, and other activities essential to productivity and income growth.

He said the Board must also focus on key strategic priorities, including deepening financial inclusion for women and youth. “We know that rural women, for example, are key actors in agriculture, yet they often have even less access to credit and technology than their male counterparts,” he said, noting that nearly 60 percent of rural women do not use mobile internet. He urged the Scheme to work with microfinance banks, cooperatives, and fintechs to design suitable credit products using mechanisms such as group lending and agent banking.

Cardoso quoted Aristotle’s maxim that “nature abhors a vacuum,” saying institutions must continually be guided and strengthened. “With today’s inauguration, we have filled a void and renewed our commitment to a prosperous, food-secure Nigeria,” he said.

He urged the Board to approach the task before it with commitment, saying the transformation of Nigeria’s agricultural value chains will require determination and innovation.

“Let us move forward together with innovation, integrity, and unyielding dedication,” he said. “We have an opportunity to ensure that the ACGSF not only regains its position but rises to new heights as the cornerstone of Nigeria’s agricultural transformation” he said.

The CBN Governor pledged full support to the Board as it begins its term. “The Central Bank of Nigeria stands ready to provide all necessary support to enable you to deliver on your mandate. I am confident that with your expertise and commitment, the ACGSF will drive significant progress toward our shared goals of agricultural prosperity and national economic development,” he said.