N250bn will finance smallholder farmers through aggregation companies, while N300bn backs a Guaranteed Minimum Price Programme to buy and release produce during price swings
The Federal Government has approved N550 billion for the Bank of Agriculture. The funds will finance smallholder farmers and support a Guaranteed Minimum Price Programme designed to stabilise food prices across Nigeria.
The Bank of Agriculture will split the N550 billion into two parts. It will use N250 billion to fund smallholder farmers through technology-driven agricultural financing systems. It will direct the remaining N300 billion toward the Guaranteed Minimum Price Programme.
Because food prices swing sharply during and after harvest season, the Guaranteed Minimum Price Programme lets the Bank of Agriculture purchase farm produce at harvest time. The bank can then release that produce back into the market later to stabilise prices and reduce food inflation.
How Farmers Will Access the Financing
The Bank of Agriculture will not lend directly to individual farmers. Instead, it will channel financing through aggregation companies, including AFEX, ThriveAgric and Arziki Noma.
Bank of Agriculture Managing Director Ayotunde Sotinrin explained the reasoning behind this structure. He said the approach will improve efficiency, strengthen value chains and reduce the risk of loan defaults.
Since the bank has not yet released detailed eligibility requirements, farmers and agribusiness operators should monitor official announcements from the Bank of Agriculture and its aggregation partners
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Industry Leaders Want More Investment
This approval follows recent calls from industry and government figures for stronger investment in Nigeria’s agricultural value chain.
Ade Adefeko, Director of Corporate and Regulatory Affairs at Olam Agri, raised this issue in a recent WebTV interview. He said Nigeria needs an intentional financing plan for smallholder farmers and agribusiness MSMEs. He also urged government to explore public-private partnerships that could scale investment in road infrastructure, storage, processing, and research and development.
Nigeria’s Minister of Agriculture and Rural Development, Senator Abubakar Kyari, made a related point at a separate event. He called on African countries to prioritise investment in science, research and innovation as the foundation of long-term food security.
Kyari made these remarks while opening the 9th Africa Agriculture Science Week and the 10th General Assembly of the Forum for Agricultural Research in Africa. He argued that Africa’s natural resources can only translate into sustainable economic prosperity when strong institutions and scientific research support them.
This N550 billion approval gives the Bank of Agriculture direct capacity to both finance farmers and intervene in food markets during price swings. However, individual farmers and cooperatives will need to work through the named aggregation companies to access funding, rather than applying to the bank directly.
