The recent inauguration of a new Agricultural Credit Guarantee Scheme Fund (ACGSF) Board by the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, signals a strategic shift in how Nigeria intends to support its farmers—especially the millions of smallholders who form the backbone of the country’s food system.
At the ceremony, Cardoso emphasized that the renewed ACGSF will not simply act as a guarantor for agricultural loans, but as a catalyst for modernizing Nigeria’s agriculture, deepening financial inclusion, and unlocking new opportunities across the value chain. For a sector that continues to shoulder national food production under immense constraints, this revitalisation arrives at a critical moment.
Repositioning an old scheme for new realities
Established in the late 1970s to encourage banks to lend to agriculture, ACGSF guarantees up to 75 percent of the net amount in default on loans issued for farming or agro-processing activities. Over the years, it has helped reduce lenders’ fears about agricultural risks, but the scheme has not always kept pace with the sector’s rapid evolution.
The new Board—comprising experts, policymakers, and sector players—is expected to inject fresh energy into how the Fund operates and ensure that interventions are aligned with modern agricultural needs. Importantly, a statutory amendment has expanded the scheme’s capital base, significantly improving its capacity to support more farmers nationwide.
What do the smallholder farmers stand to gain?
1. Broader access to credit, including women and youth
Smallholder farmers constitute the majority of Nigeria’s farming population, yet most still operate without access to formal credit. For women and rural youth—who often face additional barriers such as lack of collateral or limited digital access—the gap is even wider.
The new ACGSF Board is expected to collaborate more closely with microfinance banks, cooperatives, and fintechs to reach underserved groups. This means that smallholders who previously had no pathway to financing may now be able to obtain credit with fewer hurdles.
2. Financing for modern inputs and technology
Access to credit is often the difference between subsistence-level farming and commercial-scale productivity. With the CBN encouraging banks to support modernisation, farmers could soon have easier access to financing for:
- Mechanised equipment
- Irrigation tools
- Improved seeds and fertilisers
- Storage and processing facilities
These improvements can lead to higher yields, reduced post-harvest losses, and better market prices.
3. Reduced lending risk means more willing banks
By guaranteeing a significant portion of loan defaults, ACGSF lowers risk for banks. With the scheme being strengthened and re-energised, banks are expected to show greater appetite for lending to agriculture, including to smallholders they once considered unbankable.
More confidence from lenders translates into more money available to farmers.
4. Better monitoring and transparency
Governor Cardoso has also emphasized the introduction of stronger monitoring tools—ranging from digital tracking to data-driven platforms—to ensure that loan funds are used as intended and that outcomes can be properly measured.
For farmers, this could improve accountability and ensure the sustainability of credit programmes.
Why this is coming at the right time
Smallholders account for roughly 80 percent of Nigeria’s farmers and produce the vast majority of the food consumed nationally. Yet they remain among the least supported economically. Rising production costs, climate pressures, insecurity, limited extension services, and poor market access continue to erode productivity and profits.
The revamped ACGSF has the potential to close some of these gaps. Studies consistently show that access to affordable credit helps smallholders invest in better inputs, adopt improved technologies, and increase both yield and income. Strengthening the scheme is therefore not simply about banking policy—it is about food security, rural livelihoods, and national stability.
A potential turning point for agriculture
If the CBN’s renewed direction is fully implemented—supported by strong governance, improved outreach, and consistent monitoring—the ACGSF could become one of the most impactful tools for agricultural transformation in Nigeria.
For millions of smallholder farmers, this moment presents a renewed promise: access to funds that can help them grow beyond subsistence, expand their operations, secure better harvests, and build stronger, more resilient livelihoods.
The ACGSF’s new chapter is ultimately about restoring confidence in agricultural lending, unlocking opportunities for rural communities, and securing the future of Nigeria’s food system.
