CBN Seeks Market-driven Agricultural Lending, Repositions Credit Guarantee Scheme

● Cardoso: public funds alone can’t finance sector’s ambitions, adds public interventions must address market failures, not replace commercial lending decisions

●ACGSF unveils new identity, online portal and revised operational guidelines to improve transparency and efficiency

James Emejo in Abuja

The Central Bank of Nigeria (CBN), has moved to fundamentally restructure agricultural financing by shifting the sector away from dependence on public-sector interventions towards market-driven lending and greater mobilisation of private capital.
CBN Governor, Mr. Olayemi Cardoso, said government resources alone cannot sustainably finance the country’s agricultural ambitions.
He spoke at the opening of the national stakeholder roundtable on strengthening agricultural credit guarantees, with the theme, “Strengthening Agricultural Credit Guarantees for Inclusive and Sustainable Growth” in Abuja.
Under the proposed shift, the apex bank wants agricultural credit guarantee arrangements to move beyond merely protecting financial institutions against loan defaults to becoming instruments for unlocking significantly larger volumes of commercial and development finance across the agricultural value chain.
Cardoso said public interventions must be deliberately designed to correct market failures, reduce structural constraints and strengthen lenders’ confidence rather than displace private-sector financing or assume responsibilities better handled by commercial financial institutions.
Represented by CBN Deputy Governor, Financial System Stability (FSS) Directorate, Mr. Lamido Abubakar Yuguda, Cardoso stressed that the future of agricultural financing would depend less on the volume of public funds deployed and more on the capacity to establish credible institutions and functioning markets that can attract capital, distribute risks efficiently and support productive investments.
He said, “Our objective should be to crowd private capital in, not crowd it out.”
The CBN governor insisted that financial institutions must retain responsibility for credit assessments and lending decisions, while risks should be allocated to institutions best equipped to manage them and financing should reflect prevailing market conditions.
Although successive government interventions have sought to bridge the financing gap, Cardoso maintained that expanding the volume of agricultural credit without addressing the underlying risks and structural weaknesses would deliver limited results.
He identified commodity price volatility, inadequate collateral, information asymmetries and climate risks among the peculiar challenges that influence the willingness and capacity of financial institutions to finance agricultural activities.
According to him, the Agricultural Credit Guarantee Scheme Fund (ACGSF), established to facilitate lending to agriculture by providing guarantees to participating financial institutions, must be repositioned to reflect changing market conditions, evolving agricultural value chains, technological advancements and the increasing sophistication of financial markets.
He said the scheme should increasingly serve as a catalyst for private investment by strengthening lenders’ confidence, improving risk allocation and unlocking additional financing for commercially viable agricultural enterprises.
The governor identified stronger institutional coordination, climate resilience, digital transformation and private capital mobilisation as critical priorities for repositioning agricultural credit guarantees.
On risk management, he called for closer integration of credit guarantees with agricultural insurance, data-driven credit assessment and climate-risk mitigation mechanisms, stressing that guarantees alone could not adequately address the vulnerabilities confronting agricultural production.
He also advocated modernising the ACGSF’s operational framework to facilitate faster processing, improve monitoring, strengthen data integrity and provide more reliable information for assessing guarantee performance.
Cardoso noted that improved information infrastructure would enable lenders to assess agricultural credit risks more accurately, thereby expanding responsible lending to farmers and agribusinesses.
He further emphasised that the nation’s agricultural financing requirements were too substantial to be met through public resources alone, insisting that guarantee mechanisms must be deliberately structured to attract additional commercial and development financing.
He said, “The future of agricultural finance in Nigeria will not be determined solely by the amount of public funding deployed.
“It will be determined by our ability to build credible institutions and functioning markets that can mobilise capital, manage risks effectively and direct financing towards productive and commercially viable activities.”
According to him, “The ACGSF occupies an important position within this framework. By strengthening lender confidence, supporting effective risk-sharing and facilitating access to finance for viable agricultural enterprises, the Scheme can contribute meaningfully to a deeper and more sustainable agricultural finance ecosystem.
“As we deliberate today, I encourage us to focus on practical and measurable outcomes. We should ask ourselves: How can guarantees unlock more financing? How can risks be better shared? How can technology improve access and accountability? And, importantly, how do we ensure that the institutions we build remain sustainable over the long term?
The outcomes of this Roundtable should provide a clear “pathway for strengthening the ACGSF, deepening agricultural finance and enhancing the productivity, resilience and competitiveness of Nigeria’s agricultural sector.
“The Central Bank of Nigeria remains committed to providing the monetary, regulatory and institutional environment necessary to support financial stability and sustainable and inclusive economic growth, with greater private-sector participation.”
Cardoso urged participants to produce concrete recommendations for strengthening the ACGSF, deepening agricultural financing and improving the productivity, resilience and competitiveness of Nigeria’s agricultural sector.

ACGSF unveils new identity, targets operational overhaul

Earlier, the CBN acting Director, Development Finance Advisory Department of the CBN, Dr. Paul Oluikpe, said the roundtable was convened to address persistent structural weaknesses in agricultural financing and establish practical partnerships for improving credit delivery across the value chain.
Oluikpe observed that although the ACGSF had contributed to expanding agricultural credit since its establishment in 1977, changing market conditions, emerging financing instruments and technological developments had made a reassessment of its operational effectiveness necessary.
He noted that financing costs, repayment structures and collateral requirements often failed to reflect the realities of agricultural production, while climate variability, market uncertainties and information gaps continued to influence lending decisions.
He said the two-day engagement was designed to move beyond repeated discussions of agricultural financing challenges towards actionable solutions, institutional collaboration and measurable commitments.
As part of the reform effort, the event featured the unveiling of the ACGSF’s new brand identity, presentation of its revised operational guidelines as an exposure draft for stakeholder feedback and the launch of an online portal.
According to Oluikpe, the initiatives were designed to improve accessibility, transparency, operational efficiency and stakeholder engagement in the administration of the scheme.
The roundtable also featured the signing of strategic partnership arrangements aimed at strengthening institutional collaboration and improving agricultural finance delivery.
Oluikpe said discussions would focus on the existing agricultural credit guarantee architecture, integration of insurance and climate-risk management, emerging guarantee models and the suitability of existing agricultural lending terms.
He disclosed that technical sessions would also examine opportunities for mobilising private and development capital, establishing complementary financing arrangements and identifying practical institutional interventions.
The acting CBN director stressed that the success of the engagement would not be measured by the number of presentations or discussions but by the quality of partnerships established, the practicality of identified solutions and the commitment to implementation.
He said the Development Finance Advisory Department would facilitate the engagements and ensure appropriate follow-up on agreed outcomes.