Funding Options For Agric Expands With ₦50b Scheme

The Agricultural Credit Guarantee Scheme (ACGSF) Amendment Act assented to by President Muhammadu Buhari increased the share capital of the fund from N3 billion to N50 billion. The new scheme is in line with Central Bank of Nigeria’s (CBN’s) move to increase lending to the agricultural sector and support increased food production. The fund provides a guarantee for bank loans for agriculture and boost lending to agriculture. Financing of production farm machinery, production equipment, processing, storage and transportation are now allowed under the amended ACGSF Act, writes COLLINS NWEZE.


Before now, farmers were the least that banks would consider for loans. Such loans, if approved, were deemed lost from the outset, especially when advanced to smallholder farmers.

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Today, the story is different. Both the smallholder farmers and established ones can take a shot at bank loans. Also, lenders, which previously saw agricultural loans as high risk, are now seeing the potential of how much a well-priced credit can add to their balance sheets and profitability. The amendment of the Agricultural Credit Guarantee Scheme (ACGSF) Bill raised share capital of the fund from N3 billion to N50 billion, a step that allowed more farmers to access agricultural loans.

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A breakdown of the ACGSF Amendment Act 2019 shows that the sharing ratio is Federal Ministry of Finance (60 per cent) and Central Bank of Nigeria (40 per cent). The maximum for a non-collaterised loan under the scheme is now N100,000.00, the maximum amount for collaterised loan granted to individuals, cooperative societies and corporate entities is now N50 million, up from N10 million.

Also, complete Agricultural Value Chain financing is now allowed as well as the financing of production farm machinery, production equipment, processing, storage and transportation.


This Act amends the ACGS Fund Act Cpa. A11, Laws of the Federation Nigeria 2004, to enhance capital base, expand coverage of the scheme, increase the size of the loanable fund, increase membership and give more powers to the board.

Further details of the ACGSF showed that the amended section 2 of the Principal Act enacted by the National Assembly of the Federal Republic of Nigeria, now requires that the Minister shall appoint a chairman, a representative of the Nigerian farmers, a representative of the Federal Ministry of Finance, and a representative of the Federal Ministry of Agriculture. The fund was increased from N100 million to N50 billion, which may be increased by such amount the Board may determine and that amount shall be contributed in a proportion as the board may prescribe. President Buhari signed and certified the ACGSF Bill into law.

Godwin Emefiele

CBN Governor Godwin Emefiele identified agriculture financing as the way forward for the economy. He explained that part of its developmental role, the CBN has in collaboration with the Federal Government established the ACGSF for promoting agricultural enterprises in Nigeria.

The fund, he added, will complement other special initiatives of the apex bank in providing concessionary funding for agriculture.

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According to Emefiele, “there was no need to allocate scarce forex to rice importers when vast amounts of paddy rice of comparable quality produced by poor hard-working local farmers across the rice belts of Nigeria are wasted, and farmers are falling deeper into poverty at a time the government exports their jobs and income to rice-producing in overseas countries.

“A few decades ago, Nigeria was one of the world’s largest producers of palm oil but, today, we import nearly 600,000 metric tonnes while Indonesia and Malaysia combine to export over 90 per cent of global demand.

“Under these circumstances, I believe it is appropriate, and in fact, expected, that the CBN contributes to protecting the jobs and incomes of local farmers, using some of the same principles Western economies use to justify the protection of their farmers through huge subsidies.”

Noting that agriculture remained the largest employer of labour, the CBN chief said the sector contributes about 24.2 per cent of the country’s Gross Domestic Product (GDP).

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Emefiele described as unacceptable that the greatest share of the demand for forex goes directly to importing agricultural produce.

He said: “So, the CBN has both a direct and indirect rationale to ensure that this sector is revived in a significant way. In this regard, we are gratified that the CBN’s Anchor Borrowers’ Programme (ABP), together with other initiatives like the CACS and Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), are proving to be successful in several states.”

He explained that in Kebbi State alone, over 78,000 smallholder farmers cultivate about 100,000 hectares of rice farms. It is expected that over one million metric tonnes of rice will be produced in that state alone this year.

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Bankers’ Committee and Agric Financing

The CBN and commercial banks, under the aegis of the Bankers’ Committee, restated their commitment to expanding bank lending in agro-business to discourage importation of goods that can be produced locally.

The bankers also stated their resolve to explore large corporates as anchors to lend to participants across the value chain to improve the capacity of Nigeria’s agro-businesses to create sustainable jobs and inclusive growth.

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The bankers affirmed their commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical finance of generation, provide finance for small and medium enterprises, among others.

“We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation can produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on Gross Domestic Product (GDP) and job creation, agriculture remains a critical focus sector of the financial system,” the Committee added.

Stakeholders speak on agricultural potential in the economy

The Group Chief Executive Officer (GCEO) of Ecobank Transnational Incorporated (ETI), Ade Ayeyemi, has said Nigeria can feed Africa’s estimated 1.2 billion people if it harnesses the gains of the agricultural value chain.

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According to him, success in Nigeria’s agricultural sector means the reduction in the demand for foreign exchange to import food items into the country and the development of the agribusiness value-chain with a resultant effect in the creation of a new breed of entrepreneurs as well as jobs for the teeming population.

Ayeyemi spoke at the Ecobank Agribusiness Summit in Lagos. The summit had its theme “Unlocking Productivity and Investment Opportunities Across Nigeria’s Agribusiness Value Chain”

Also speaking, Minister of Agriculture and Rural Development, Mohammed Nanono affirmed that the administration of President Mohammadu Buhari is committed to finding a lasting solution to issues bothering on food security affecting the country.

He stressed on the need for viable synergy and collaboration between relevant stakeholders in the agricultural sector, to further promote its contribution to the Gross Domestic Products (GDP) of the country.

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“Nigeria’s potentials and prospects make the agricultural sector a pilot for economic stabilisation, diversification and growth in the country. Indeed, the sector is a major contributor to the national Gross Domestic Product (GDP), contributing about 27 per cent to the GDP and the biggest in job creation in the non-oil sector”.

Nanono disclosed that the Federal Government has also earmarked N600 billion to enhance farmer access to agricultural financing in the country. He said that about 2.4 million farmers were targeted to benefit from the interest-free facility, designed to encourage the application of modern technologies in rice and cash crop cultivation.

Nanono said the initiative would support farmers to achieve improved productivity, enhance self-sufficiency and food security in the country. He said: “We have commenced farmer registration exercise to capture their information, number of farmlands and locations.

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“Also, the beneficiaries will be monitor to ensure effective utilisation of the facility, and mobilise participation in subsequent programmes.”

ACGSF’s Linkage Banking Initiative

Through the ACGSF Self-Help Group Linkage programme, farmers are encouraged to form themselves into groups of between five and 15 based on common purpose (informal and informal). The groups are encouraged to undertake regular savings with a partner bank of their choice. After operating such savings for six months, they could then apply to the partner bank for a loan. The amount saved provides part cash security for loans to saving groups.

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Bank loans to the groups are normally in multiples of the balance in their savings account at the time of the application for the loan. The group savings security would not be drawn on until the loans are fully repaid. The aim of the Self-Help Group Linkage Banking is to inculcate the culture of savings and banking habit in-group members as well enable them to build up resources for financing their farm projects without recourse to bank borrowing on the long run.

Understanding the ACGSF Amendment Bill

The ACGSF Amendment Bill, sponsored by Senator Andy Uba, a representing Anambra South senatorial district, was targeted at improving the prospects of commercial agriculture as an integral contributor to the Nigerian economy. This it seeks to do by expanding the capacity to guarantee credit facilities extended to Nigerian farmers, and making the regulation of such finances in consonance with international best practices.

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Furthermore, the new Act will facilitate better management of agricultural funds, enhance greater transparency, promote export business and safeguard the delivery of dividends to Nigerian farmers.

Uba disclosed that the law would drive the course of Nigeria’s economic diversification.

Analysts said that with the signing of the ACGSF bill into law, the Federal Government is reiterating its commitment towards repositioning the agricultural sector and enhancing its overall contributions to the government’s overall earnings.

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