Banks Reluctant to Lend to Farmers Despite Credit Scheme

The Agricultural Credit Guarantee Scheme Fund (ACGSF) is failing to facilitate access to financing for farmers in Nigeria, according to Moham Magaji, President of the Farmers Association of Nigeria. He expressed concerns that commercial banks are largely unwilling to lend to the agricultural sector, with 90% of them avoiding agricultural investments.

The ACGSF does not directly disburse funds to farmers, which limits its effectiveness. Magaji highlighted that stringent lending conditions, particularly high collateral requirements, make it nearly impossible for smallholder farmers to access credit.

He noted that fulfilling these collateral demands can take four to five months, which is impractical for farmers. Additionally, the current market realities, such as low prices for agricultural products, further discourage farmers from taking loans.

Rashe Bolarinwa, a corporate affairs manager at a bank, acknowledged the challenges faced by farmers. Olayemi Cardoso, the Governor of the Central Bank of Nigeria, pointed out that agriculture receives less than 5% of total bank lending, despite its significant contribution to the GDP and employment.