Food Security: CBN directs Agricultural Scheme Fund Board to extend credit access to farmers

*Olayemi Cardoso, Governor of the Central Bank of Nigeria, charges the newly-inaugurated Board of the Agricultural Credit Guarantee Scheme Fund to ensure that lack of collateral or remote location no longer prevents farmers from accessing credit to meet the financing needs of modern agriculture

Gbenga Kayode | ConsumerConnect

The Central Bank of Nigeria (CBN) has charged the newly inaugurated Board of the Agricultural Credit Guarantee Scheme Fund (ACGSF) to ensure that lack of collateral or remote location no longer prevents Nigerian farmers from accessing credit.

Olayemi Cardoso, Governor of the CBN, gave the charge, in Abuja, FCT, during the inauguration ceremony, describing the Scheme as a critical institution that must evolve to meet the financing needs of modern agriculture.

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ConsumerConnect reports the 48-year-old ACGSF is regarded as one of Nigeria’s foremost and longest-standing development finance programmes, with a rich history in our socio-economic journey.

It is not the CBN going back to interventions in some sectors but a continuation of the apex bank’s statutory mandate which recognises ACGSF.

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Cardoso said the core objective going forward is to make agricultural credit more accessible and inclusive.

The Governor CBN stated: “Our goal should be that a lack of collateral or remote location is no longer an insurmountable barrier to financing.”

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He described agriculture as central to Nigeria’s economic structure, pointing out that despite its contribution to national output and employment, credit to the sector remains very low.

He equally noted: “Agriculture remains the backbone of our economy, contributing over one-fifth of Nigeria’s GDP and employing nearly two-thirds of our working population.

“Yet, paradoxically, it receives only a small fraction of formal credit – less than 5 percent of banks’ lending goes to the agricultural sector.”

The CBN Governor said the 48-year-old ACGSF was established to reverse this trend, noting that it remains one of Nigeria’s most enduring development finance tools.

“It is not the CBN going back to interventions in some sectors but a continuation of the apex bank’s statutory mandate which recognises ACGSF,” he said.

Cardoso urged the Board to ensure that the Scheme becomes a reliable partner for farmers seeking financing.

The CBN Governor said: “Every hardworking farmer with a viable project should find in the ACGSF an enabling partner that helps them access the robust support they need to grow their enterprise.”

Stressing the need for stronger monitoring mechanisms to track the impact of guaranteed loans, Cardoso averred that the era of disbursing funds without verifiable outcomes must end.

He explained: “It is essential to institute a framework for tracking the impact of guaranteed loans on agricultural productivity and farmers’ welfare.

“This Board should champion the use of data and technology for real-time monitoring of projects supported under the Scheme.”

Leveraging tools, such as satellite imagery to track crop progress and digital dashboards to monitor loan disbursements would improve transparency and accountability.

“Regular oversight will ensure that loans guaranteed by the Fund are being used for their intended purposes and are yielding positive results,” he added.

Cardoso also said that proper evaluation will help the Board identify emerging risks such as regional loan defaults and respond proactively through borrower support or adjustments in the Scheme’s approach.

He asserted that sound evidence of increased output, higher farm incomes, and better food security is necessary for policy decisions that will strengthen the Fund’s operations.

On new chapter in agricultural finance

According to him, the inauguration of the Board as timely, noting that Nigeria must urgently bridge its lingering agricultural financing gap.

Cardoso stated: “This 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.”

Reviewing the Scheme’s legal foundation, Cardoso stated that “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.”

He noted that by guaranteeing up to 75 percent of agricultural loans, the Fund has enabled banks to lend to categories of farmers that would ordinarily have been excluded.

However, he stated that the complexities of today’s agricultural landscape require the Scheme to be more dynamic.

The CBN Chief Executive noted: “Modern agriculture is far more complex – characterised by extensive value chains, advanced technologies, climate and security risks, and stakeholders ranging from smallholder cooperatives to agritech startups.

“We must, therefore, reposition the ACGSF as a dynamic, forward-thinking scheme capable of addressing these complexities,” he said.

The CBN Governor recalled that a 2019 amendment expanded the Scheme’s share capital from N3 billion to N50 billion, placing it on stronger footing.

He commended the Board’s broader composition, noting that the law now provides for a representative of Nigerian farmers.

“Such inclusivity is strategic; it enshrines partnership between policymakers, financiers, and the farming community in guiding the Scheme’s activities,” he stated.

Cardoso added that Nigeria’s agricultural sector sits at “the crossroads of unprecedented opportunity,” aligning with the Federal Government’s Renewed Hope agenda to build a resilient, technologically advanced, and inclusive agricultural economy.

Achieving this vision, he said, requires dismantling long-standing barriers to credit access, especially for smallholder farmers who produce the bulk of Nigeria’s food.

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