Agricultural Finance in Nigeria: Critical Discussions of Associated Problems and Prospects from a Rural Small-Scale Farmers Perspective

Abstract

Prior to the discovery of oil in commercial quantity, agriculture was the mainstay of the country’s economy. According the NBS 2023 report which put the contributions of the agricultural sector to the GDP at around 24% quite significantly very low compared to the pre and post-independence position of 65%. The abysmal low contributions in the last decade of the last century, despite significant funds pumped into the agricultural sector the Central Bank of Nigeria through the anchor borrowers’ scheme, Agricultural Credit Guarantee Scheme Fund (ACGSF), Commercial Agriculture Credit Scheme (CACS) and Bank of Industry among others. 

This paper will critically investigate the performances and the level of achievements of the various schemes covering a period of 1960 to 2023.  Furthermore, the role of financial institutions will be examined.  This paper will focus on systemic literature review to understand the agricultural sector in Nigeria where academic journals from relevant sources were consulted.  The paper found out that factors impeding the agricultural finance in Nigeria include among others, policy inconsistency and somersaults, absence of commodities marketing and pricing institutions, lack of effective and adequate storage, inadequate insurance coverage and more importantly, corruption just to mention a few. This paper opined that if the Agricultural sector is to contribute significantly to the Nigerian economy, there has to be a robust financial system that will provide agricultural finance to rural small-scale farmers and on a larger scale the commercial farmers.