ACGSF: CBN laments low credit to agric sector
Omeiza Bilal
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso has lamented the low level of formal credit to agriculture by commercial banks.
According to data, less than 5 percent of banks’ lending that goes to the agric sector.
Cardoso stated this Tuesday during the inauguration of the Agricultural Credit Guarantee Scheme Fund (ACGSF) in Abuja.
According to him, “Tis 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.
“It is a reassertion that we will no longer accept business-as-usual; instead. we embrace a future where agriculture is accorded its rightful place in our financial system and national priorities.
“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.
“By guaranteeing up to 75% of the value of agricultural loans, the Scheme has historically served as a catalyst for banks to lend where they otherwise might not. Over the decades, countless farmers who would have been deemed “unbankable” have accessed financing thanks to this guarantee mechanism.”
He stressed that. the challenges and opportunities of today’s agricultural landscape demand that the ACGSF evolves beyond its traditional role. Modern agriculture is far more complex – characterized by extensive value chains, advanced technologies, climate and security risks, and stakeholders ranging from stallholder cooperatives to agritech startups.
He argued, “We must therefore reposition the ACGSF as a dynamic, forward-thinking scheme capable of addressing these complexities stressing, this includes leveraging the Scheme’s strengthened capacity following the 2019 amendment expanded its share capital from N3 billion to NSO billion and broadened the scope of its operations- and ensuring that its governance draws in the voices of all stakeholders,
He noted that the ACGSF Act now provides for 7 Board comprising not only government officials but also a Scheme’s activities. partnership between policymakers, financiers, and the farming community_ in guiding the representative of Nigerian farmers, among others. Such inclusivity is strategic.
“Realizing this vision requires us to decisively overcome the financing constraints that have long stifled agriculture’s growth. Smallholder farmers – who make up 80 percent of Nigeria’s farmers and account for about 90 percent of our agricultural production continue to face high barriers in accessing affordable credit. Many lack collateral or credit history and are perceived as high-risk by conventional lenders. This is a structural abnormally We can no longer afford, given that these same smallholders feed our nation and drive our rural economy.”
He added, “The ACGSF must therefore assume a transformative role in closing the agricultural credit gap. It should not simply guarantee loans as a formality, but actively catalyze an expansion of lending to agriculture on affordable terms, we envision an agricultural financing ecosystem where farmers and agri-entrepreneurs can obtain credit to invest in modern inputs, irrigation, mechanization, storage, processing, and other value-adding activities.
“As this illustrious Board begins its tenure, I urge you to focus on a few strategic priorities where we can swiftly unlock significant value, expand the Scheme’s reach to underserved segments of our farming population, especially 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 a male counterparts – studies indicate nearly 60% of rural women do not use mobile internet, limiting their access to emerging digital services.
