CBN repositions agricultural credit guarantee scheme

By Emma Ujah, Abuja Bureau Chief The Central Bank of Nigeria (CBN) has announced plans to reposition its development finance strategy towards a market-based and sustainable framework to boost agricultural financing and attract greater private-sector investment. CBN Governor, Olayemi Cardoso, disclosed this at the National Stakeholder Roundtable on “Strengthening Agricultural Credit Guarantees for Inclusive and Sustainable Growth” held in Abuja on Monday.

His address was read on his behalf by the Deputy Governor, Financial System Stability, Lamido Abubakar. Cardoso said the repositioning would focus on market-based financing, increased private-sector participation, stronger institutional collaboration and sustainable risk-sharing mechanisms. “Consistent with this mandate, the Bank is repositioning its development finance approach towards market-based financing, greater private-sector participation, stronger institutional collaboration, and sustainable risk-sharing mechanisms,” he said.

The CBN governor described agriculture as central to Nigeria’s economic transformation, food security, employment generation and rural development, noting that the sector remained the country’s largest employer of labour. He, however, identified limited access to sustainable financing as a major constraint despite the sector’s enormous potential. According to him, agricultural lending is challenged by climate-related risks, commodity price volatility, inadequate collateral, information gaps and the seasonal nature of agricultural production.

These factors, he said, affect the willingness and capacity of financial institutions to extend credit to the sector. “The challenge before us is not simply how to increase the volume of agricultural credit, but how to build a financing ecosystem where credit is accessible, risks are appropriately managed, and investment remains commercially sustainable,” Cardoso said.

He noted that the Agricultural Credit Guarantee Scheme Fund (ACGSF) had played an important role since its establishment by providing guarantees to mitigate the risks faced by financial institutions lending to farmers. However, he said emerging climate risks, evolving agricultural value chains, technological advances and increasingly sophisticated financial markets had made it necessary to reassess the scheme’s operations to ensure its continued relevance, efficiency and sustainability.

“Guarantee arrangements should increasingly serve as catalytic instruments that improve risk allocation, strengthen lender confidence, and unlock additional private capital for productive investment in agriculture,” he said. Cardoso maintained that the CBN’s strategy remained anchored on monetary and price stability, financial system resilience and the promotion of a sound financial environment.

He said sustainable agricultural financing must be driven by viable economic activities and sound credit decisions, while public institutions should focus on addressing market failures and encouraging private-sector participation. The governor also called for stronger collaboration among guarantee institutions, banks, insurance companies, development finance institutions, government agencies and other stakeholders to reduce fragmentation, address information gaps and ensure public interventions complement private financing.

He stressed the need to strengthen risk management and climate resilience through better integration of credit guarantees, agricultural insurance, data-driven credit assessment and climate-risk mitigation. On mobilising private capital, Cardoso said Nigeria’s agricultural financing needs could not be met through public resources alone, urging stakeholders to deploy guarantee mechanisms strategically to attract more commercial and development finance.

Earlier, the Acting Director of the CBN’s Development Finance Advisory Department, Dr Paul Oluikpe, said agricultural financing remained critical to improving productivity and growth, but persistent financing constraints continued to limit the sector’s potential. Also speaking, President of the All Farmers Association of Nigeria (AFAN), Muhammad Magaji, criticised the high interest rates charged by commercial banks, calling for a reduction to support agricultural expansion.

Magaji also expressed concern over delays in the government’s distribution of agricultural inputs, saying they negatively affected farming productivity.