As Nigeria strives to improve food security and guarantee improved livelihood for millions of Nigerians, one financial institution is demonstrating that agriculture can be both profitable and transformative.

First City Monument Bank (FCMB) has emerged as one of the leading financiers of Nigeria’s agribusiness sector, deploying innovative financing models that help farmers increase productivity, access markets, and improve livelihoods while contributing to national food security.

For many years, agricultural financing was considered a high-risk venture by most financial institutions. Smallholder farmers, who account for the bulk of food production in Nigeria, were often excluded from formal financing due to limited collateral, poor record-keeping, climate risks, and inadequate infrastructure.

However, FCMB has proven that with the right strategy, agricultural lending can be profitable while delivering significant developmental impact.

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Speaking in an interview, FCMB’s Divisional Head of Agribusiness and Non-Oil Exports, Mr. Kudzai Gumunyu, said the bank has successfully developed a financing model that supports every player in the agricultural ecosystem, from input suppliers to farmers, processors, distributors and exporters.

According to him, the bank’s intervention is helping to drive agricultural productivity, increase exports and create sustainable economic opportunities across rural communities.

“Agriculture contributes about 25 per cent of Nigeria’s GDP, and we believe the sector should contribute significantly to the growth of the bank as well,” Gumunyu said.

He noted that Nigeria’s heavy dependence on crude oil revenues has repeatedly exposed the economy to external shocks when global oil prices fluctuate.

This reality, he said, underscores the importance of developing alternative sources of economic growth, with agriculture occupying a strategic position.

“Whenever there is a problem in the oil sector, the Nigerian economy suffers. That is why diversification is critical. Since establishing our agribusiness unit in 2012, FCMB has deliberately focused on supporting agriculture and non-oil exports as part of our contribution to national development,” he said.

Unlike conventional lending approaches that focus on individual borrowers, FCMB has adopted a value-chain and ecosystem financing model that enables the bank to support all participants involved in agricultural production.

The model covers input suppliers, seed companies, fertiliser manufacturers, farmers, aggregators, processors, manufacturers, distributors, and exporters.

According to Gumunyu, this approach allows the bank to better manage risk while ensuring that all components of the agricultural value chain function efficiently.

“A value chain is only as strong as its weakest link. If one segment fails, the entire chain is affected. That is why we finance the whole ecosystem and ensure that all participants are properly connected,” he explained.

The strategy has become increasingly important in Nigeria, where smallholder farmers face multiple challenges that limit their access to formal credit.

Many farmers operate in remote locations with poor infrastructure and limited access to banking services. Most do not possess formal land titles that can be used as collateral, while others lack the financial records required to secure loans.

Climate change has compounded these challenges, exposing farmers to droughts, floods and changing weather patterns that can destroy harvests and affect loan repayment capacity.

According to Gumunyu, these realities explain why agriculture receives only a small proportion of total banking sector lending despite its importance to the economy.

“On average, only about four per cent of banking sector assets are allocated to agriculture. At FCMB, our exposure at over thirteen percent is significantly higher because we understand the sector and have built structures to manage the risks,” he said.

The bank’s success in agricultural financing is rooted in its risk-management approach.

Rather than relying solely on physical collateral, FCMB evaluates the entire production and marketing process before approving loans.

The bank assesses the source and quality of inputs, expected yields, access to mechanisation, market availability, transportation arrangements, and the financial standing of borrowers.

It also ensures that farmers and agribusiness operators are linked to reliable off takers who can purchase their produce after harvest.

This approach has helped the bank maintain one of the lowest non-performing loan ratios in the sector.

“You manage most of your risk at the point of approval. We focus on understanding what we are financing, identifying potential risks and putting measures in place to mitigate them before funds are disbursed,” Gumunyu said.

One of the bank’s most effective risk management tools is structured aggregation models.

Under this arrangement, farmers are grouped under aggregators who provide quality inputs, extension support and guaranteed market access.

The aggregators purchase produce from participating farmers and sell to processors or larger buyers, ensuring a stable flow of products and payments.

The model has delivered remarkable results.

Gumunyu revealed that one FCMB-supported aggregator that started with approximately N16 million in financing has grown into a major agricultural enterprise supporting more than 300,000 farmers across Nigeria.

Through access to quality seeds, fertilisers, mechanisation services, and structured markets, participating farmers now achieve average maize yields of about 4.2 tonnes per hectare, significantly above the national average of 1.5-2 tonnes.

In addition, farmers receive prices approximately 38 per cent higher than they would typically earn through informal market channels.

The impact on livelihoods has been substantial.

Farmers are investing in education, healthcare, transportation, and agricultural equipment, while rural economies are experiencing increased economic activity.

“We have demonstrated that smallholder farmers can be financed profitably and with very low risk. The aggregator benefits, the farmer benefits and the entire ecosystem benefits,” he said.

The bank has also introduced several mechanisms to de-risk agricultural financing.

These include insurance products covering droughts, floods, fire outbreaks, theft and transportation risks.

FCMB also works with development finance institutions and guarantee providers to reduce exposure and expand access to affordable credit.

Additionally, the bank deploys collateral management systems that monitor financed commodities and prevent diversion of proceeds.

Monitoring remains a key component of the strategy. “We monitor farmers, aggregators and processors throughout the production cycle to identify challenges early and ensure that projects remain on track,” Gumunyu explained.

Beyond financing, technology is becoming a powerful tool in FCMB’s efforts to promote financial inclusion among rural farmers.

The bank is leveraging digital channels such as USSD banking, agency banking networks, and technology partnerships to reach underserved communities. Because many rural farmers do not own smartphones, USSD platforms have become an effective way to provide access to banking services.

Aggregators also serve as banking agents, helping farmers open accounts and access financial services without travelling long distances.

The bank’s support for agricultural technology innovation extends to agritech hackathons, which have produced numerous startups offering solutions to challenges across the agricultural value chain.

According to Gumunyu, some of these startups have grown into successful businesses and are now clients of the bank.

The institution’s commitment to inclusion also extends to women and youth.

Recognising that these groups often face greater barriers to accessing finance, FCMB has developed specialised programmes to empower them.

Through its SheVentures initiative and partnerships with organisations such as the Mastercard Foundation, the bank provides affordable collateral-free loans to women and young entrepreneurs.

Some beneficiaries access financing at interest rates as low as nine per cent, enabling them to establish and expand agricultural enterprises.

For FCMB, supporting women and youth is not merely a commercial objective but a social investment.

“When you solve unemployment among youths, you positively impact the economy. When you empower women, you improve the welfare of entire families and communities,” Gumunyu said.

The bank’s interventions are also helping Nigeria tap into the enormous opportunities available in non-oil exports.

FCMB finances major players in export-oriented agricultural commodities, including cocoa, cashew, sesame, hibiscus, ginger, and soy products.

These commodities continue to enjoy strong demand in international markets and represent important sources of foreign exchange earnings.

However, exporters face increasing challenges in meeting global quality and sustainability standards.

One emerging concern is the European Union Deforestation Regulation (EUDR), which requires exporters to demonstrate that products destined for European markets were not cultivated on land classified as forest after 2020.

According to Gumunyu, compliance with such regulations will be essential for maintaining market access.

Certification, quality assurance, and traceability are therefore becoming increasingly important aspects of agricultural financing and export development.

Looking ahead, FCMB believes that stronger collaboration among government, financial institutions, and private-sector operators will be critical to improving food security and agricultural productivity.

Gumunyu identified rural infrastructure, irrigation systems, mechanisation, extension services, storage facilities, and market access as key areas requiring greater investment.

He particularly emphasised the importance of addressing post-harvest losses, which account for up to 40 per cent in grain production and, in some cases, as high as 60 per cent in fruits and vegetables.

Improved storage systems and strategic grain reserves, he argued, would help stabilise food prices and enhance national food security.

“Food security requires finance, infrastructure, quality inputs, mechanisation, storage, security, and markets working together. When all these components function effectively, productivity improves, and food becomes more affordable,” he said.

As Nigeria continues its search for sustainable economic growth beyond oil, FCMB’s experience offers valuable lessons on how financial institutions can drive agricultural transformation.

By combining innovation, risk management, technology, and inclusive financing, the bank is helping thousands of farmers improve productivity, strengthen food security, and expand non-oil exports.

In the process, FCMB is not only raising the bar in agricultural financing but also helping to shape a more resilient and diversified Nigerian economy.