FG Advocates Blended Finance Model to Address Nigeria’s N3.4frn Agriculture Financing Gap 

Oluchi Chibuzor 

The Minister of Livestock Development, Idi Maiha has called for blended finance models to drive down the nation’s N3.4 trillion agricultural financing gap to boost productivity and yield.

Speaking at the Vanguard Economic Discourse event held in Lagos yesterday, the minister said food security must be treated, not just as an agricultural priority, but as a pillar of national security and socio-economic stability. 

Represented by his Special Adviser, Prof. Eustace Iyayi, Maiha that livestock contributes about 5 to 8 percent of Nigeria’s GDP and accounts for nearly one-third of agricultural GDP. 

He maintained that beyond these figures, livestock plays a critical role in nutrition, particularly in addressing protein deficiency, noting that access to agricultural finance remains one of the biggest problems that both crop and livestock farmers have.

According to him, “We need to have a bridge in this sector. How can farmers have access to finance with single digits? Because there is no business venture in agriculture you can do when you have interest rates as high as 23-25%. It is just not possible. 

“One of the messages we would like to take out of here is, can we have our financial institutions create platforms that will enable farmers to have access to finance that will attract single-digit interest rates? Less than 5% of commercial bank lending goes to agriculture. This is also true. To address this, Nigeria must promote blended finance models, agricultural insurance, credit guarantees, and private sector investment platforms.”

The event themed, ‘Food Security and Socioe-conomic Stability: Options for Nigeria’s Agriculture Sector Rebound’, for Maiha is both timely and urgent, reflecting the reality that food security has become one of the most critical determinants of national stability, economic resilience, and social cohesion. 

He said, “We can’t stress this fact too much in terms of the global and national context of food security. We recognise that across the globe, food systems are undergoing profound stress. Climatic variability, geographical disruptions, inflationary pressures, and rapid population growth are reshaping how nations produce, distribute, consume food. In Nigeria, these global challenges are further compounded by domestic structural constraints.”

On his part , the Minister of Agriculture and Food Security, Abubakar Kyari, emphasised that food security is a foundation where all socio-economic stability is built upon.

Represented by his Technical Assistant On partnership And Collaboration, Maruf Ajenifuja, he said that one of the strategic options for Nigeria is actually to scale up the access to inputs and reduce the cost of input to smallholders farmers across the country.

According to him, “The government is addressing that through a combination of land management, climate-smart agricultural practices, improving access to irrigation facilities, as well as other mechanisation devices for farmers to actually produce more.

“We’re also looking at rolling up more mechanisation agenda or interventions that will help farmers to actually improve their farming operation. We are also implementing a flagship project called Special Agro-Industrial Processing Zone. It’s a $538 million project that’s actually for value addition or secondary value addition and private sector development.”

He stressed that his ministry understand that the nation still has mechanisation deficits adding “Over “80-90% of our farmers are still operating on manual labour, while about 60% are operating on animal-drawn implements. Only about 3-4% are operating fully mechanised engine-powered operations.

“Of course we know this will limit productivity as well as efficiency, and of course we will not be able to attain the economy of scale in production that will actually drive down what we refer to as the inflation cost for food.” 

In terms of financing gaps, Kyari said, “The estimated cost of financing agriculture through some of our financial institutions is something like N3.4 trillion, but this also represents less than 4 per cent of the GDP’s contribution, indicating that we have massive deficits in agricultural finances.

“With that, we agree and we know that the evidence is very clear. When you support the smallholder farmers, and when input is being supported, the cost of production will go down. The yield will increase, and the food inflation will also come down.”

Commenting, the United Nations’ Food And Agriculture Organisation, Representative in Nigeria and ECOWAS, Dr. Hussein Gadain, noted that a sector cannot rebound without access to finance. 

According to him, “Smallholder farmers, pastoralists, and agri-preneurs require affordable credit, insurance, and digital financial services to invest, grow, and manage risk. Public policies and blended finance mechanisms should attract private capital while protecting the most vulnerable.

“Nigeria’s agricultural rebound hinges on strengthening trade‑ and market‑led growth across priority cash crops-cocoa, cashew, cassava, livestock products, and other high‑value commodities-to enhance export earnings, reduce import dependence, and improve the balance of trade.”

He added, “Priority actions include upgrading market infrastructure, improving logistics and cold chains, enforcing quality and sanitary standards, and expanding agro‑processing to shift from raw commodity exports to value‑added products.

“A strong research and development (R&D) ecosystem-linking national research institutes, universities, and the private sector-is critical to develop improved varieties, animal genetics, and processing technologies that meet global quality, safety, and traceability requirements for international markets.”