CBN Backs Private Capital, Not Intervention, for Agric Credit Guarantees
By Patience Ikpeme
The Central Bank of Nigeria (CBN) is not bringing back its old development finance intervention model under the Agricultural Credit Guarantee Scheme Fund (ACGSF). It wants private banks and investors to carry more of the cost of lending to farmers, with the scheme used to share the risk.
This was the clear message at the National Stakeholder Roundtable on Strengthening Agricultural Credit Guarantees, which opened on Tuesday at Fraser Suites in Abuja. The Governor, Mr. Olayemi Cardoso, was represented by the Deputy Governor for Financial System Stability, Mr. Isa Yuguda, who delivered his keynote address.
The CBN Governor said the bank is repositioning its development finance approach toward market-based financing, greater private-sector participation and shared risk. Mr. Cardoso said the aim is to “crowd private capital in, not crowd it out.” Public institutions, he said, should fix real market failures and build confidence, not take over the work of lenders. Banks should decide who gets credit, risks should rest with those best able to manage them, and loan pricing should reflect market conditions.
For farmers who remember cheap, government-backed loans, this signals a different approach. The address did not announce new intervention funds. It said public money alone cannot meet Nigeria’s farm financing needs, and that guarantees must bring in far more commercial and development finance than the public funds put in.
The scheme, set up in 1977, has long covered part of the losses banks suffer when farm loans go bad. The keynote said that role is no longer enough. Guarantees should also improve how risk is shared and give banks the confidence to lend more from their own resources.
Lenders face hard problems in farming, Cardoso said. These include bad weather, unstable crop prices, weak collateral, poor information on borrowers and the seasonal nature of production. Guarantees cannot solve all of this alone, so they should work together with agricultural insurance, better data for assessing borrowers and ways of managing climate risk. The scheme itself will also be modernised for faster processing, better monitoring and more reliable data.
Mr. Yuguda said high interest rates in Nigeria are temporary and should fall considerably by next year. He also said Nigeria led in cash and food crops 50 years ago but now produces only “a quarter” of that, despite the same weather and soil. He called for a return to practices such as extension services, and said splitting family farmland across generations is no longer practical.
Dr. Paul Oluikpe, Acting Director of the CBN’s Development Finance Advisory Department, welcomed participants. He said many farmers still struggle to borrow, and that costs, repayment schedules and collateral demands often ignore how farming works. A session at the roundtable will ask whether current agricultural lending terms are fit for purpose. He said the meeting was “not intended merely as another forum for discussing familiar challenges” and that its success would be judged by the partnerships formed and the solutions put into practice.
The event also marked changes to the scheme. A new brand identity was unveiled, along with an online portal. Revised operational guidelines were released as a draft for public comment.
