Between 2015 and 2023, the Central Bank of Nigeria disbursed over ₦1 trillion under the Anchor Borrowers’ Program (APB), a signature policy intervention aimed at boosting agriculture in Nigeria and reducing import dependency. While its dismal loan recovery rate (little over 50%) has been cited as proof of its ineffectiveness, other statistics exist. One is the country’s food import bill, totalling over ₦11 trillion in the same period. Beyond this, the percentage of farmers citing inadequate access to finance as their top challenge remains astounding, especially in the face of multiple agricultural funds from the apex bank, the Bank of Industry and other developmental institutions, state government funds, and others. One of the key impediments to bridging the financing gap is the last mile: getting funding to actual smallholder farmers.
The Last Mile Challenge in Smallholder Farmer Finance
A sizeable percentage of farmers cite a lack of access to well-priced financing as a key impediment to productivity. Financing challenges range from limited loan access to exorbitant interest rates, particularly from private and informal lenders in rural areas. This has forced farmers to rely almost exclusively on personal savings. In a recent food pricing and production survey by Veriv Africa, more than 50% of the surveyed farmers reported that they relied on personal savings as their primary, or only, source of financing for production expenses in the planting season. This out-of-pocket spending for agriculture, in addition to healthcare and other key expenditures, poses a significant risk to the farmer's well-being and limits productivity.
In recognition of the funding challenge in the sector, the federal and state governments have repeatedly designed policies to enhance access to financing, often at concessional interest rates, to enable growth in the industry and improve farmer productivity. The most far-reaching recent attempt was the CBN’s Anchor Borrowers’ Program, a ₦1 trillion intervention to provide low-interest financing for farmers and other players in key crop value chains. Beyond this, other institutions such as the Bank of Industry and the Development Bank of Nigeria have deployed multi-billion naira loan schemes to enable access to financing for farmer groups and MSMEs in the sector. Finally, state governments, acting alone or in concert with the Federal Government and multilateral institutions, have designed and deployed intervention schemes ranging from cash grants to purchasing and distributing inputs such as seeds, chemicals, and fertilisers.
Unfortunately, these interventions have failed to bridge the funding and productivity gaps in the agricultural sector, especially among smallholder farmers who comprise nearly 88% of the farming population and are responsible for the bulk of the nation’s food crop production. After years of throwing money at the sector by all tiers of government, farmers continue to rank a lack of access to loans and grants as their biggest challenge in many areas, save for places with acute security challenges. In the latter places, lack of access to financing comes as a close second.
The reasons for this continued gap between interventions and present realities are multifold. They include the inability to meet documentary requirements, language barriers, lack of trust in the application process, lack of knowledge of these interventions, corruption in the distribution process, and more. Previous insights have covered the role of some of these challenges. What could be done differently?
Getting The Last Mile Right
While the funding dedicated to the agriculture sector continues to rank below key recommendations, such as the Malabo Declaration for African economies, the inability of existing funding to reach the intended recipients only reinforces the importance of getting last-mile delivery right if the sector is to reach its full potential. This goal could be achieved in several ways.
First, there is a need to rethink the distribution of financing to farmers and create incentives for farmers to access these funds. Until now, the agricultural finance intervention process has often begun with an announcement by the sponsor (a federal or state government agency) of a considerable amount to be disbursed to farmers, followed by the creation of a web portal for application, with multiple eligibility criteria listed (often in English), and, in some cases, the deployment of funds to microfinance banks who are assumed to be close to farmers. On paper, the argument for microfinance banks’ proximity to farmers makes sense. In reality, it is more complicated. There is an unbridged language barrier. There is no deliberate outreach to these local farmers. The farmers themselves are often unaware of the intervention or the application process. The entire process seems complicated when they are aware, with no middleman (an extension officer or someone nearby) to ask questions. And so, the intervention remains stuck, is distributed to a few educated farmer-traders, or simply disappears.
These interventions could be better designed. A good place to start is by studying the existing financial system in many rural areas, including the role of POS agents who transport cash between rural dwellers and nearby towns, the Esusu collectors who double as private lenders, and local community groups that provide short-term financing and some form of insurance to farmers. These agents could either facilitate microloans for farmers or serve as application partners, guiding them through the process, requirements, available funds, and next steps.
Beyond these micro-interventions, there is a need to replace standard documentary requirements with practical alternatives. Most farmers who own land through family inheritance often lack the requisite papers to prove ownership. And nearly half of Nigerians, mostly in rural areas, lack access to electricity. These realities mean that funds and loans with strict requirements for proof of land ownership and/or residence already cut out a significant percentage of farmers whom the funds purportedly target. In place of these impractical requirements, and until the state governments tackle the problem of land tenure and rural electricity in their states, there is a need to harness existing social systems as alternative proofs of residence and ownership. A letter from the local chief or cooperative chairperson vouching for the applicant and confirming their family’s ownership of the land should suffice. Proofs of identity, such as the National Identity Number (NIN) and/or voters' card, could be more easily acquired by farmers. With these challenges sorted, microbank accounts can be opened and funds disbursed. The same social system could be relied on to ensure farmers live up to their repayment commitments.
On the problem of the distribution of inputs such as fertilisers and improved seeds/stems, there is a need for greater transparency and accountability. Radio broadcasts, documentary video evidence, and other methods could be used to document and inspect the exact number of inputs disbursed to each local government area, ward, and village. This can be compared with the intended number agreed upon before the commencement of the process. Significant deviations must be investigated, and those in charge mandated to answer questions on the whereabouts of disbursed inputs. By ensuring transparency across the supply chain, significant cases of theft and black market sales could be reduced, if not eliminated.
The rapt attention to Nigeria’s food insecurity and the need to diversify the country’s economy by building the agriculture sector is laudable. Similarly, the increasing financial disbursement to the industry is commendable. However, until the last-mile challenge is addressed—bridging the gap between local financial institutions, target farmers, and input distributors and recipients—funds will continue to fall short of their intended impact. Understanding smallholder farmers' financial dynamics, addressing their concerns, encouraging participation, and ensuring accountability in input delivery is crucial.
References
Central Bank of Nigeria. (2024). Anchor Borrowers Program. https://www.cbn.gov.ng/DFD/agriculture/ABP.html
Veriv Africa. (2024). Nigeria macroeconomic outlook 2025. https://www.verivafrica.com/2025outlook
Bank of Industry. (2025). Annual report 2023. https://www.boi.ng/report/2023-annual-report/
National Bureau of Statistics. (2023). Foreign trade in goods statistics. https://www.nigerianstat.gov.ng/pdfuploads/Q3_2023_Foreign_Trade_Statistics_Report.pdf
