Bank lending to Nigeria’s agricultural sector rose to 5.33% of total credit as of May 2025, marking a cautious but notable return of financial institutions to agribusiness, according to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).
The increase reverses a multi-year decline in agricultural financing, after the sector’s share of total lending dropped from 6.18% in 2022 to 4.82% in 2024 amid slowing growth and heightened risk aversion among lenders.
NIRSAL has been instrumental in driving this rebound. The organization reported facilitating more than N70 billion in commercial financing for agribusinesses in the third quarter of 2025, its strongest annual performance since its establishment in 2013.
This amount represents nearly one-quarter of the N270 billion in total agricultural financing the agency has mobilized to date.
The renewed appetite from banks is partly linked to NIRSAL’s risk-sharing frameworks and technical support designed to mitigate default risks and enhance the bankability of agribusiness ventures.
Two newly licensed banks entered the agricultural financing space this year, leveraging NIRSAL’s tools to design and manage structured loan products for the sector, according to Nairametrics.
“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.”
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Despite these gains, significant structural challenges persist. Agriculture’s contribution to GDP growth has slowed, and overall lending volumes remain well below the levels needed to drive large-scale sectoral transformation.
NIRSAL’s integrated model, which combines deal structuring, credit guarantees, and advisory services, has helped some agribusinesses transition from one-time financing arrangements to long-term banking relationships.
However, underemployment and informality continue to define much of the sector.
NIRSAL also reported that over 1,100 bank staff have received training on agricultural finance this year, alongside value chain participants specializing in feedlot management, commodity exports, and climate finance.
Whether these initiatives will translate into sustained lending growth remains uncertain.
Additionally, the institution is developing a digital platform known as the NIRSAL LandBank portal to connect stakeholders across the agricultural value chain and provide data-driven insights for investment decisions.
In a related effort, NIRSAL recently signed an agreement with the Rural Electrification Agency to support off-grid energy solutions for rural production clusters, an initiative aimed at improving productivity and resilience.
NIRSAL aims to mobilize up to N150 billion in agricultural financing by the end of the year.
Yet, the broader question remains whether Nigeria’s financial system is ready to view agriculture as a commercially viable sector rather than merely a development priority.
For now, the uptick in lending marks progress, though it has yet to signal a definitive trend.
In 2024, the House of Representatives urged the Central Bank of Nigeria (CBN) to tackle the issue of under-financing in the agricultural sector by providing NIRSAL with an additional $3 billion.
During the motion, Hon. Uchenna Okonkwo highlighted the country’s struggling economy, widespread poverty, and deepening food insecurity, attributing these problems to declining agricultural productivity, low capital investment, and insufficient sectoral funding.
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Image Credit: The Street Journal
