CBN to ACGSF: Remove Collateral Barriers for Farmers
By Patience Ikpeme
The Central Bank of Nigeria (CBN) has issued a clear mandate to the newly inaugurated Board of the Agricultural Credit Guarantee Scheme Fund (ACGSF), tasking them with dismantling perennial barriers to finance for Nigerian farmers.
The CBN Governor, Mr. Olayemi Cardoso, insisted that the 48-year-old Scheme must evolve into a modern, dynamic, and inclusive tool for agricultural prosperity.
Speaking at the inauguration ceremony in Abuja, Mr. Cardoso described the ACGSF as a critical and longest-standing development finance programme.
He was quick to address any speculation regarding the apex bank’s policy direction, explaining that the Scheme is “not the CBN going back to interventions in some sectors but a continuation of the apex bank’s statutory mandate which recognises ACGSF.”
The core objective for the new Board, he explained, is to revolutionize access to credit. “Our goal should be that a lack of collateral or remote location is no longer an insurmountable barrier to financing,” the Governor said, calling for the ACGSF to become a reliable partner. “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.”
Mr. Cardoso lamented the structural anomaly where, despite agriculture being central to the nation’s economy, formal credit remains elusive. “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,” he noted.
To reverse this, the CBN Governor stressed the urgent need for stronger monitoring and accountability mechanisms to track the impact of guaranteed loans. He stated that the era of disbursing funds without verifiable outcomes must end.
“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,” he charged.
Leveraging tools such as satellite imagery for crop progress and digital dashboards for loan monitoring, he added, would improve transparency and help identify emerging risks like regional loan defaults. He maintained 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.”
The Governor described the inauguration of the Board as timely, given the urgency required to bridge the financing gap that has “constrained the potential of millions of Nigerian farmers.” He acknowledged the ACGSF’s historical role in de-risking agricultural lending by guaranteeing up to 75 percent of loans but contended that the complexities of today’s landscape—including extensive value chains, advanced technologies, and climate risks—demand a more dynamic approach.
The Scheme is on stronger footing following a 2019 amendment that expanded its share capital from N3 billion to N50 billion. Mr. Cardoso also acknowledged 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 observed.
The Board was further tasked with deepening financial inclusion for women and youth, key actors in agriculture who often face greater barriers to credit and technology. The Scheme was urged to work with microfinance banks, cooperatives, and fintechs to design suitable credit products.
In closing, Mr. Cardoso cited Aristotle’s maxim that “nature abhors a vacuum,” confirming that the inauguration “has filled a void and renewed our commitment to a prosperous, food-secure Nigeria.” He called on the Board to approach the transformation of Nigeria’s agricultural value chains with determination.
“Let us move forward together with innovation, integrity, and unyielding dedication,” he concluded, pledging the CBN’s full support to enable the Board to deliver on its mandate.
