Nigeria has a federal scheme designed to push banks toward agricultural lending, yet farmers say the money still is not reaching them. According to Punch, the President of the All Farmers Association of Nigeria, Mohammed Magaji, has raised concerns over limited access to agricultural financing, blaming commercial banks for their reluctance to support farmers despite the existence of the Agricultural Credit Guarantee Scheme Fund.
The Gap in the Guarantee
Magaji told Punch that the scheme does not directly disburse funds to farmers, explaining that the fund only guarantees loans, which is why banks remain unwilling. He estimated that about 90% of commercial banks do not want to lend to agriculture at all, saying they do not want to invest in or enter the sector. The Agricultural Credit Guarantee Scheme Fund was established by decree in 1977 and became operational in 1978, with the Central Bank of Nigeria serving as managing agent and the share capital under the scheme standing at ₦50 billion.
The Repayment Problem
Beyond bank reluctance, Magaji questioned the viability of repaying agricultural loans given current market realities, as reported by Punch. High interest rates compound the issue. A separate analysis by the Institute of Food Technologists noted that the main funding options available to food businesses in Nigeria are traditional bank loans with interest rates close to 30%, with government-owned development bank funding described as unreliable.
Why Credit Access Drives Prices
The financing squeeze lands directly on production costs at the worst possible time. The All Farmers Association of Nigeria warned through its Vice President, Daniel Okafor, in comments to Leadership, that soaring costs of fertilisers, improved seeds, and agrochemicals are major obstacles this planting season, with labour costs also rising sharply for the smallholder farmers who account for more than 70% of Nigeria's food output. The same report cited Food and Agriculture Organisation projections that about 35 million Nigerians could face acute hunger during the June to August 2026 lean season without urgent intervention.
When farmers cannot access affordable credit, they plant less, buy fewer inputs, and produce smaller harvests, all of which feed through to higher retail prices. FoodPrices Nigeria tracks those retail prices across Lagos markets and treats the farm-finance bottleneck as one of the structural forces sitting behind every price it records.