Why Financing, Not Farming, Is Nigeria’s Real Agricultural Frontier

Nigeria does not have a farming problem. It has a financing problem. That is the central argument advanced by Afolasade Onifade, a banking and development finance expert, who believes that inadequate access to affordable and sustainable capital remains one of the greatest constraints preventing Nigeria from unlocking its enormous agricultural potential.

In her paper, “Banking the Harvest: Why Financing, Not Farming, Is Nigeria’s Real Agricultural Frontier,” Onifade argues that Nigeria possesses the land, labour, climate and entrepreneurial capacity required to become a global agricultural powerhouse. What is missing is a financial architecture capable of consistently moving capital to the farmers and agribusinesses that produce the nation’s food.

Nigeria has an estimated 70 million hectares of arable land, a large youthful workforce and diverse climatic conditions capable of supporting the production of a wide range of crops and livestock.

Agriculture contributes roughly one-fifth of the country’s Gross Domestic Product and remains one of its largest sources of employment. Yet Nigeria continues to spend enormous amounts importing food.

For Onifade, this contradiction exposes the real problem.

Nigerian farmers can produce, but too many cannot access the capital required to produce at scale.

Agricultural lending has historically represented only a small share of total private-sector credit, despite the sector’s importance to the economy. Smallholder farmers, who produce a significant proportion of Nigeria’s food, are frequently considered too risky by conventional financial institutions because they often lack formal credit histories, acceptable collateral, reliable records and predictable cash flows.

The consequences are enormous.

Farmers unable to access finance cannot consistently purchase quality seeds, fertiliser, machinery, irrigation systems, pesticides or improved technologies. They cultivate smaller areas, rely heavily on rainfall and frequently sell immediately after harvest because they lack storage and working capital.

This creates a vicious cycle: low financing leads to low productivity, low productivity leads to low income, and low income makes farmers even less attractive to conventional lenders.

Nigeria has already demonstrated that agricultural credit can work

Onifade points to the Anchor Borrowers’ Programme (ABP) launched by the Central Bank of Nigeria in 2015 as evidence that Nigerian smallholder farmers are willing and able to participate in formal agricultural finance when the right structures are created.

The programme sought to connect smallholder farmers with processors and off-takers while providing financing and agricultural inputs.

Its scale demonstrated something important: millions of farmers can be integrated into structured agricultural financing programmes.

But the bigger question is what happens after the initial intervention.

According to Onifade, Nigeria must move beyond programmes that repeatedly inject government-supported capital into agriculture and begin building institutions capable of lending, recovering funds, learning from previous cycles and lending again.

In other words, agricultural finance needs to become an industry, not an emergency intervention.

The American lesson

One of the most compelling examples in Onifade’s analysis comes from the United States.

More than a century ago, America faced challenges associated with agricultural financing and rural credit. Its response was the establishment of the Farm Credit System in 1916.

Rather than creating a temporary government lending programme, the United States developed a borrower-oriented cooperative financial system supported by government policy and access to capital markets.

Over time, the system evolved into one of the world’s largest agricultural lending networks.

The lesson for Nigeria is not to copy the American system word-for-word. Rather, it is to understand the principle behind it.

Sustainable agricultural finance requires institutions that can continuously recycle capital.

Farmers need financial institutions that understand agricultural cycles, understand commodity markets and are designed specifically around the realities of farming.

Public policy should therefore focus on creating the conditions that allow private capital to enter agriculture rather than attempting to permanently replace private finance.

The financing gap is also an investment opportunity

Nigeria’s agricultural financing deficit should not be viewed only as a development challenge.

It is also a massive investment opportunity.

Across Africa, billions of dollars in agricultural financing remain unmet every year. At the same time, global investors are increasingly looking for opportunities connected to food security, climate resilience, sustainable agriculture and emerging markets.

The challenge is connecting that capital with credible agricultural opportunities.

This is where technology could become transformative.

Data could make farmers bankable

For decades, one of the biggest problems confronting agricultural lenders has been information.

Banks often do not know precisely how much land a farmer cultivates, what the farmer produces, how much is harvested, who buys the produce or how much income the farm generates.

Technology is beginning to change that.

Digital identities, transaction records, satellite imagery, farm mapping, weather data, production histories and digital marketplaces can create a more complete picture of a farmer’s economic activity.

A farmer who previously appeared invisible to a financial institution could increasingly have a digital agricultural identity showing land size, production history, transactions, market relationships and repayment behaviour.

That information can become the foundation of a new generation of agricultural credit scoring.

Instead of asking only, “What collateral does this farmer have?”, lenders can begin asking, “What does this farmer produce, how reliably does the farm perform, where is the farm located, who buys the output and what does the data tell us about the farmer’s ability to repay?”

This represents a fundamental shift in agricultural finance.

From collateral-based lending to data-driven lending

Nigeria’s agricultural future may therefore depend heavily on the ability to transform agricultural data into financial value.

Satellite-verified farmland, digital payments, commodity-price information, weather intelligence, input purchases and historical production records can collectively reduce the uncertainty traditionally associated with smallholder agriculture.

This is particularly important for digital agricultural platforms.

Platforms such as Commodity.ng can play an important role in building the information infrastructure required to connect farmers, markets, financial institutions and investors.

When reliable commodity prices, production information, market demand and farmer activity are digitised, agriculture becomes increasingly transparent and therefore more investable.

What Nigeria should build

Onifade’s argument points toward a new agricultural financing architecture for Nigeria built around several pillars.

First, Nigeria needs stronger farmer-owned and farmer-focused financial institutions capable of understanding agricultural cycles.

Second, government and development institutions should expand credit guarantees, first-loss facilities and blended-finance structures that reduce the risks faced by commercial lenders.

Third, agricultural lending should increasingly incorporate digital data and alternative credit scoring rather than relying exclusively on traditional collateral.

Fourth, Nigeria needs deeper agricultural capital markets that allow lenders to recycle capital and attract institutional investors.

Fifth, agricultural financing must be connected to markets and off-takers. Financing farmers without ensuring that they can sell their produce profitably leaves a major part of the agricultural equation unresolved.

Finally, financing must extend beyond production to include storage, logistics, processing, irrigation, mechanisation and value addition.

The farmer who receives money to produce maize but has no storage facility and is forced to sell immediately after harvest remains financially vulnerable.

Agriculture can become Nigeria’s greatest economic frontier

Nigeria’s agricultural opportunity extends far beyond feeding its population.

A productive agricultural economy can create rural employment, reduce food imports, strengthen the naira through foreign-exchange savings, generate exports, expand manufacturing and create millions of opportunities for young Nigerians.

Every tonne of food produced domestically represents demand that does not need to be met through imports.

Every processing facility creates jobs beyond the farm.

Every agricultural technology adopted by farmers can generate new markets for Nigerian businesses.

And every successful farmer who gains access to sustainable finance becomes part of a broader economic transformation.

Nigeria therefore needs to change how it thinks about agricultural finance.

The question should no longer be simply:

“How much money can government give farmers?”

The more important question is:

“How can Nigeria build a financial system that allows farmers to access, use and repay capital sustainably?”

That is the real frontier.

Nigeria already has the land. It has the farmers. It has the markets. It has the youthful population and the agricultural demand.

What it needs is the financial architecture capable of connecting these assets.

The soil was never Nigeria’s greatest constraint. The system was. And systems can be built.

Commodity.ng Insight

Nigeria’s next agricultural revolution will not be driven by land alone. It will be driven by the convergence of finance, data, technology and markets.

The biggest opportunity may lie in transforming the Nigerian farmer from an informal producer into a verifiable economic entity whose productivity and transaction history can be measured and financed.

If banks can see the farmer, investors can understand the opportunity, insurers can assess the risk and markets can provide transparent price signals, agricultural capital can begin flowing at a scale Nigeria has never experienced.

This is where the future of platforms such as Commodity.ng becomes particularly important: building the market-intelligence infrastructure that can make Nigeria’s agricultural economy more transparent, measurable and investable.

Nigeria does not need another cycle of agricultural rescue programmes. It needs an agricultural financial system that can stand on its own, recycle capital and grow with the farmer.

That is how farming becomes an industry—and how agriculture becomes one of Nigeria’s greatest engines of national prosperity.