High Lending Rates and Poor Credit Access Undermine Nigeria’s Food Production Potential
Written by Okafor Joseph Afam | SpringnewsNG Media Limited | Tel: +234 703 949 0464 | Email: springnewsng@gmail.com | July 10, 2025
Nigeria’s Food Productivity Suffers as Farmers Struggle with High Loan Interest Rates and Poor Access to Credit
Nigeria’s efforts to boost food production are being undermined by one critical issue: lack of access to affordable credit. With agricultural loans coming at unsustainable interest rates, many smallholder farmers and agripreneurs are unable to access the financing needed to expand their operations and increase productivity.
According to experts, the absence of single-digit agricultural financing is a key reason for the sector’s underperformance despite Nigeria’s vast agricultural potential.
“Funding is the biggest problem in Nigeria’s agriculture,” said Abiodun Olorundenro, Managing Partner at Prasinos Farms. “Without access to affordable loans, farmers cannot bring together the essential factors of production.”
Soaring Interest Rates Killing Agribusiness Dreams
Nigeria’s current Monetary Policy Rate (MPR) stands at 27.5 percent, one of the highest in Africa. This has forced commercial banks to lend at rates between 30 and 38 percent, making agricultural loans practically unaffordable for most farmers.
“The interest rates offered by deposit money banks are unsustainable. No agribusiness can thrive under these terms,” Olorundenro emphasized.
Untapped Agricultural Potential
Despite having over 84 million hectares of arable land, only 40 percent is currently cultivated, and just 10 percent of that is optimized. Experts argue that with proper financing, Nigeria could unlock the full potential of its agricultural land, feeding its growing population and reducing food imports.
“Farmers need access to single-digit credit facilities to improve productivity,” said Jude Obi, President of the Association of Organic Agriculture Practitioners of Nigeria (NOAN). “Without affordable loans, we cannot scale food production in Nigeria.”
He also called for tailored financing models for different types of crops, explaining that food crops and cash crops cannot thrive under the same loan conditions.
Only 7% of Farmers Access Bank Loans
A 2022 National Agricultural Sample Census conducted by the National Bureau of Statistics (NBS) revealed that just 7 percent of farming communities in Nigeria have ever accessed micro-credit from banks.
The reason? Experts blame Nigeria’s flawed agricultural subsidy programmes and systemic corruption in the allocation and disbursement of funds.
Corruption, Delays and Inefficiencies Undermine Subsidy Impact
Nigeria’s agricultural subsidy programs have long been criticized for corruption, political interference, delays, and mismanagement. Many genuine farmers are excluded from intervention programmes due to poor verification processes. In contrast, non-existent or politically connected “farmers” often benefit from these funds.
Some beneficiaries of these loans under federal subsidies reportedly treat them as “their share of the national cake,” failing to repay and worsening the credit ecosystem for real farmers.
“Fertilizer subsidies and other interventions have failed because of lack of action and accountability,” said Obi, who also serves as a professor in the Department of Soil Science at the University of Uyo.
Experts Call for Transparent, Institutionalised Farm Financin
Agricultural stakeholders are calling for the institutionalization of intervention programmes within the Bank of Agriculture (BoA) to ensure transparency and that only genuine farmers benefit.
“To improve food production, Nigeria must eliminate corruption from agricultural programmes, enforce strict policy guidelines, and implement a stable, farmer-friendly credit structure,” Obi stated.
Nigeria’s food security and agricultural development are being held hostage by high interest rates, poor access to credit, and widespread corruption in subsidy programmes. With over 84 million hectares of arable land, the country has the potential to become Africa’s food basket—but only if it prioritizes affordable credit, effective policy implementation, and corruption-free institutions.
