The Central Bank of Nigeria (CBN) towed the path of economic resilience and sustainable growth by relaunching the moribund Agricultural Credit Guaranty Scheme Fund (ACGSF). At least the last we heard or read anything about ACGSF was far back in 2005 when the CBN made mention of the then Board under the chairmanship of Alhaji Umaru Baba in its annual report.
This important ‘special purpose vehicle’ was established by the Nigerian government, vide Decree 20 of 1977, to encourage banks lending to the agricultural sector and mitigate the risk associated with agricultural financing. Risk aversion has been a major bane to the growth and modernization of the sector. Hence, the primary objective is to provide guarantees for credit facilities extended by financial institutions to farmers, thereby alleviating the banks’ risks and boost lending to this crucial sector, which employs a significant portion of Nigeria’s workforce.
In 2019, efforts were made to give a new lease of life to this strategic scheme which nearly went into extinction, with the amendment of the law establishing it. That particular move significantly increased the Fund’s share capital from N3 billion to N50 billion, thereby expanding its capacity to deliver on its mandates.
Now that a new board has been inaugurated, one is optimistic that the stage is set for the scheme to fulfill its mandates. More so that farmers are now well represented on the board which ensures inclusivity.
The well articulated and robust mandate of the scheme has enliven the hope that it’s going to address part of the numerous challenges confronting the country’s agriculture which has rendered it incapable of unleashing its potentials or even retain its enviable socio-economic position of 1960s.
The bane of the country’s agricultural sector includes insecurity, poor infrastructure, outdated methods due to low level of mechanization and technology adoption, limited access to credit high input costs, climate change impacts, and weak value chains leading to low productivity, and undue reliance on imports despite immense potentials begging to be tapped.
The new ACGSF Board composed of accomplished individuals chaired by Dr. Olusegun Oshin, with members drawn from the banking industry, academia and agricultural sector has the task of effectively addressing the barriers to agricultural financing.
At the inauguration of the new board, the CBN Governor, Olayemi Cardoso acknowledged the fact that agricultural remains the backbone of Nigeria’s economy contributing one fifth to the gross domestic product (GDP) but lamented that the sector remained almost neglected by attracting a negligible fraction of less than five percent of total credit in economy.
No doubt that financing gap has tremendously limited the potentials of millions of small holder farmers and of course able bodied youths who were willing to practice agriculture as businesses or hobby. Of course, agriculture not only lost its potentials of feeding the ever increasing population but also missed the potentials of serving as catalyst for industrialization and foreign exchange earner for the country.
It is never an exaggeration that agriculture has what it takes to address poverty and its associated ills like malnutrition, diseases, low investment and social maladies. Poverty levels in Nigeria are projected to deteriorate sharply, with as many as 141 million Nigerians—about 62% of the population—expected to be living in poverty by 2026.
According to the World Bank the absolute number of people living in poverty has increased sharply, from about 81 million in 2019 to roughly 139 million in 2025.
Food bills account for up to 70% of total consumption among poorer Nigerians, thereby leaving them highly exposed to food price increases. The current ease experienced in the headline inflation not withstanding, the pass-through effects of structural deficiencies will continue to keep food prices high.
However, period of lamentation should be discarded as Nigerians look forward to revolutionised agricultural practices with appropriate financing strategy. The panacea for agric development is never a single magic bullet, rather a holistic approach integrating technology in form of functional mechanization, digital tools, sustainable practices, water resources management and improved finance which ACGSF stands for.
The above propositions might an illusion without vibrant security architecture, good rural road networks, agro-processing facilities, and linking farmers to markets to reduce costs and add value which are essential to leapfrog and reposition agricultural production.
The board of the ACGSF should not occupy itself with issue of finance or credit alone but to initiate effective collaborative strategies towards achieving its mandate. The place of institutional support cannot be wished aside as issues such as land administration and accessibility are critical for inclusiveness and effective mobilization for smallholder farmers for enhanced productivity. Supporting institutions like the Nigerian Agricultural Insurance Corporation, National Agricultural Land Development Authority (NALDA) , River Basin Development Authorities should be revived along with a adequately capitalized Bank of Agriculture as all have vital and complementary roles to play at this critical time.
The recent resolve of the National Economic Council under the chairmanship of Vice President Kashim Shetima to deepen the engagement with stakeholders to boost non oil revenues and accelerate the transition from oil to non oil economy should be taken as further motivation for all stakeholders in the agricultural and allied sectors leverage. It’s incontrovertible fact that agriculture takes precedence when considering non oil potentials of the country. As such, no effort should be spared at this point in time to reposition it.
A thriving agricultural sector not only provides food and raw materials among other associated value chains but also serves moral booster for the citizens. A country that is self sufficient in food production commands respect prides among comity of nations and possibly its pride itself as a power bloc.
The desired goal for agricultural development is about transforming the sector into a robust engine for inclusive and sustainable economic growth by addressing its structural challenges with a comprehensive, integrated strategy.
The central Bank of Nigeria has again demonstrated its determination to wrestle down inflation, especially food prices, which is a major driver of inflation in the country by assuming yet another pivotal role in agricultural financing. This singular move is enough to catalyze growth for other sectors of the economy.
Going forward, CBN should be very assertive in discharging its developmental roles in the Nigeria’ s economy in addition to traditional mandates of price and financial system stability. In several jurisdictions central banks have deployed asset- based reserves requirements to influence allocation of credit to critical sectors. Countries like China, India, Brazil, Russia and even the United States of America in one form or the other strongly support agriculture through subsidy, crop insurance, research and extension services. Coming down home, countries like Ethiopia and Senegal have shown significant government commitment toward the development of agriculture.
As we welcome the return of a rejuvenated ACGSF and the inauguration of the new board, the CBN should know that guaranteeing credit alone even at 100 percent is never enough to reposition agriculture to the desired stage. The Bank should also step in boldly to galvanize the support of other stakeholders in agriculture to play their statutory roles so that its efforts are not in vain. More so, the whole effort should not be on production alone but other several agricultural value chains with a view to ensuring sustainable agribusiness in Nigeria.
Ummie wrote in from Abuja, Nigeria.