Central bank calls for more private investment to close funding gaps and strengthen food security
The Central Bank of Nigeria says public resources alone cannot meet the country’s agricultural financing needs, calling for increased private-sector investment to address funding gaps, boost productivity and strengthen 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 in Abuja. He was represented by Lamido Yuguda, the Deputy Governor in charge of Financial System Stability.
Cardoso said Nigeria needed sustainable financing arrangements that could attract commercial investment while reducing the risks associated with agricultural lending.
“The scale of Nigeria’s agricultural financing needs cannot be met by public resources alone. Guarantee mechanisms must therefore be designed to achieve additionality, using public resources strategically to unlock substantially greater volumes of commercial and development finance,” he said.
He said the CBN was shifting its development finance activities towards market-based lending, greater private-sector participation and sustainable risk-sharing arrangements.
Agricultural financing, he said, should be based on viable economic activities and sound lending decisions, while government institutions should focus on addressing market failures and structural constraints.
“Our objective should be to crowd private capital in, not crowd it out,” Cardoso said.
He identified climate risks, commodity price volatility, limited collateral, information gaps and seasonal production cycles as major barriers to lending to farmers.
He said agricultural credit guarantees should do more than protect lenders against default, and should help attract investment across agricultural value chains.
“The future of agricultural credit guarantees must therefore go beyond protecting lenders against default. Guarantee arrangements should increasingly serve as catalytic instruments that improve risk allocation, strengthen lender confidence and unlock additional private capital for productive investment across agricultural value chains,” he said.
Cardoso outlined four priorities for improving agricultural finance: stronger institutional coordination, climate-risk management, digital transformation and mobilisation of private capital.
He called for closer cooperation among commercial and microfinance banks, insurers, development finance institutions and government agencies to reduce fragmentation and improve credit delivery. He also advocated incorporating agricultural insurance, climate-risk mitigation and data-based credit assessments into guarantee schemes.
Modernising the Agricultural Credit Guarantee Scheme Fund, he said, would improve processing times, monitoring, transparency and credit-risk assessment.
Cardoso said the CBN would continue to provide the monetary, regulatory and institutional environment needed to support sustainable agricultural investment.
Earlier, the Chairman of the ACGSF Board, Olusegun Oshin, expressed concern about high borrowing costs, saying agricultural financing terms often failed to reflect farmers’ production cycles.
“High interest rates are an issue, and it’s something that we are looking at considerably,” he said.
Oshin said farmers needed affordable credit that would allow them to recover production costs and earn reasonable profits. He said the board planned to reposition the scheme from a traditional credit-guarantee institution into a more responsive organisation capable of supporting sustainable agricultural financing.
“Our 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 said.
He added that the scheme was exploring co-financing, refinancing, agricultural insurance and stronger institutional partnerships to expand access to credit.
In his welcome address, the Acting Director of the CBN’s Development Finance Advisory Department, Paul Oluikpe, said financing constraints continued to limit agricultural productivity and investment.
“For many farmers and agribusinesses, access to credit remains difficult, while financing costs, repayment structures and collateral requirements often fail to reflect the realities of agricultural production,” he said.
Oluikpe said the ACGSF, established in 1977, needed continuous reform to remain effective amid changing market conditions and technological developments.
He announced the launch of the scheme’s new brand identity and online portal, as well as the release of revised operational guidelines for stakeholder feedback.
The two-day roundtable is also expected to consider agricultural insurance, climate-risk management, private capital mobilisation and strategic partnerships. Oluikpe said its success would depend on practical recommendations, institutional collaboration and measurable improvements in agricultural credit delivery.
