Bank lending to Nigeria’s agricultural sector has edged up to 5.33% of total credit as of May 2025, reversing a multi-year decline and signaling a cautious return of financial institutions to agribusiness, according to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).
The uptick follows a period of stagnation, where agriculture’s share of lending fell from 6.18% in 2022 to 4.82% in 2024, amid slowing sectoral growth and rising risk aversion.
NIRSAL has played a central role in this shift.
According to the organization, it facilitated over N70 billion in commercial financing for agribusinesses in the third quarter of 2025—its strongest annual performance since inception in 2013.
That figure accounts for nearly a quarter of the N270 billion NIRSAL has mobilized for agriculture to date.
Renewed Interest from Banks
The renewed interest from banks is partly attributed to NIRSAL’s risk-sharing frameworks and technical support, which aim to reduce default risks and improve the bankability of agribusinesses. Two newly licensed banks have entered the sector this year, relying on NIRSAL’s tools to structure and manage agricultural loans.
“N70 billion may appear modest compared to the size of Nigeria’s agricultural financing needs, but the significance is profound,” said NIRSAL Managing Director Sa’ad Hamidu. “It proves that agriculture can be commercially and sustainably financed.”
Despite the recent gains, structural challenges remain. Agriculture’s contribution to GDP growth has slowed, and lending volumes are still far below what’s needed to support large-scale transformation.
NIRSAL’s model—combining deal structuring, credit guarantees, and advisory services—has helped some agribusinesses transition from one-off financing to routine banking relationships. But underemployment and informality continue to dominate the sector.
Training on Agricultural Finance
NIRSAL says over 1,100 bank staff have undergone training on agricultural finance this year, with additional sessions for value chain actors focused on feedlot management, commodity exports, and climate finance. Whether these efforts translate into sustained lending growth remains to be seen.
The institution is also developing a digital platform, the NIRSAL LandBank portal, intended to connect stakeholders across the agricultural ecosystem and provide data for investment decisions. It recently signed an agreement with the Rural Electrification Agency to support off-grid energy access for rural production clusters—a move aimed at improving resilience and productivity.
While NIRSAL targets N150 billion in financing by year-end, the broader question is whether Nigeria’s financial system is ready to treat agriculture as a viable commercial sector rather than a development obligation. For now, the rise in lending share is a step forward, but not yet a trend.
What You Should Know
Last year, the House of Representatives urged the Central Bank of Nigeria (CBN) to address the issue of under-financing in the agricultural sector by providing NIRSAL with an additional $3 billion.
- In his presentation, Hon. Uchenna Okonkwo pointed to Nigeria’s struggling economy, widespread poverty, and growing food insecurity as a result of reduced agricultural productivity.
- He attributed these issues to the low levels of capital investment and insufficient funding in the agricultural sector, which have severely hindered its growth.
