Poor funding, infrastructure crippling agric lending — CBN

A Central Bank of Nigeria (CBN) official has highlighted poor funding and inadequate infrastructure as key obstacles to agricultural lending in Nigeria. Dr. Michael Ononugbo, Deputy Director and Special Assistant in the Office of the Deputy Governor, Economic Policy Directorate, stated that the country's agricultural finance gap stems from structural weaknesses rather than a mere lack of capital.

At the Global Project for the Promotion of Agricultural Finance for Agri-based Enterprises in Rural Areas (GP AgFin Nigeria) conference in Abuja, Ononugbo emphasized that smallholder farmers and rural enterprises encounter numerous challenges, including fragmented landholdings, limited technological access, weak infrastructure, inadequate storage facilities, climate-related vulnerabilities, and volatile commodity prices.

These factors, coupled with limited financial records, insufficient collateral, and information asymmetries, make it difficult for conventional lending models to effectively serve these groups. Ononugbo cautioned that poorly structured, untimely, expensive, or disconnected financing arrangements may fail to improve productivity or may even worsen borrowers' vulnerability.

He also questioned the level of investment in agricultural research, stating that inadequate funding is hindering innovation and productivity. The GP AgFin project, funded by Germany, reached 101,449 farmers and agribusinesses across 10 states, showing that the financing gap can be reduced through appropriate tools and institutional support.

The project supported 19 out of 22 agricultural finance products piloted, with 11 financial institutions developing products and 53% of financial literacy trainees being women. The lessons from the project are expected to be integrated into national development and agricultural policy frameworks to sustain access to finance beyond the intervention.