Threat to Food Security: Only 7% of Farmers Receive Bank Loans

Despite agriculture’s significant contribution to Nigeria’s economy, employing about 70 per cent of households and accounting for over 20 per cent of the country’s gross domestic product (GDP), only 7 per cent of farming communities accessed bank loans, highlighting a critical credit shortage that hampers the sector’s growth.
Experts have called for more funding for Nigerian farmers and urged financial institutions to do more to assist them with the financial tools they need to grow.

Findings show that despite Nigeria boasting over 84 million hectares of arable land, the country’s farmers remain cut off from the financial tools they need to grow.
For instance, in 2022, only 7 per cent of farming communities secured bank credit (NBS, 2022), leaving millions unable to scale operations.

A recent National Bureau of Statistics (NBS) report revealed that out of the vast number of farmers across Nigeria, just a small fraction secured micro-credits or bank loans, with Lagos and Ogun states recording the highest access rates at 26 per cent and 14 per cent, respectively. Overall, only 11 per cent of agricultural communities reported the ability to borrow from banks, with many farmers preferring cooperative organisations for credit due to less stringent collateral requirements.
The low level of bank lending to agriculture is stark when compared to the sector’s importance. In 2023, only about ₦2.26 trillion -roughly 5 per cent of total private sector loans -was extended to agriculture, making it the lowest among Nigeria’s top economic sectors for commercial bank loans.
This undercapitalisation persists despite government interventions such as the Central Bank of Nigeria’s Anchor Borrowers’ Programme, which has supported millions of smallholder farmers but still faces challenges in loan repayment and scale.

Nigeria’s agriculture sector, which employs around 35% of the workforce, is facing significant challenges due to stagnant productivity and unmet food needs. The sector, which spans four sub-sectors: crop production, livestock, forestry, and fishing, faces persistent financing challenges such as insufficient collateral, high interest rates, and limited presence of financial institutions in rural areas. Infrastructural deficits, price volatility, and restricted market access further exacerbate these issues.

Despite these challenges, the story is shifting in Lagos and Ogun states, with 26% and 14% of farmers accessing micro-credits in 2022 and nationally. The value of credit to private agriculture jumped from ₦853 billion in Q1 2020 to over ₦4 trillion by Q4 2021. Sterling Bank is transforming this narrative by providing digital solutions, customised financing, and strategic partnerships that empower farmers, boost yields, and strengthen food systems. The bank has developed the Agriculture Finance Value Chain Model (AgFin) through its HEART strategy, which focuses on Health, Education, Agriculture, Renewable Energy, and Transportation. Sterling Bank is investing in entire value chains, not just funding farms but supporting processors, aggregators, and market access.

Source: leadership.ng

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