The National Bureau of Statistics (NBS) has released a report, in collaboration with the Federal Ministry of Budget and Planning, the World Bank, the FAO, and other organizations, highlighting that as of 2022, only 7% of farming communities in Nigeria reported receiving microcredits from banks.
The “National Agricultural Sample Census” report reveals significant disparities in access to agricultural loans across different regions.
The report indicates that farmers in Lagos and Ogun states were the most likely to receive agricultural loans from banks, with 26% and 14% of farmers, respectively, reporting access to such loans. Nationally, only 11% of agricultural communities had access to bank loans, with most areas reporting significantly lower percentages.
The survey also shows that credit facilities from cooperative groups were more widely available than those from banks, with roughly 24% of the communities surveyed stating that such facilities were available.
The study concludes that farming communities prefer borrowing from cooperative organizations due to the lower collateral requirements compared to traditional banks.
The report states, “Data was also gathered regarding the community members’ sources of agricultural financing. The findings from the community interviews show that these kinds of lending options were uncommon in Nigeria. In general, only 7% of the communities mentioned banks and microcredits as sources of agricultural financing.
However, approximately 14% in Ogun State and roughly 26% in Lagos State cited microcredits and banks as their sources of agricultural credit, respectively. Of the total communities polled, only 2,907 (11%) stated that their members can borrow money from banks. While the availability of these loans from banks is minimal in most states, over 37% of communities in Lagos State claimed access to such loans.”
The study highlights the challenges faced by farming communities in obtaining finance to enhance productivity and augment national food production.
In 2023, banks allocated just N2.26 trillion, or 5.07%, of the N44.54 trillion in loans made to the private sector to the agriculture sector, which accounts for more than 20% of Nigeria’s GDP.
However, the Central Bank of Nigeria (CBN) report showed that, out of the top 10 sectors of the Nigerian economy, the agriculture sector received the least amount of commercial bank loans.
The report also disclosed that around 40.2 million households, or 70% of all households in the nation, are engaged in agriculture. Among these, 91% produce crops, while approximately 48% raise animals.
According to the survey, Nigerian agricultural households cultivate an average of 3.3 plots of land, with Ebonyi state having the highest average at 5.9 plots per household and Lagos state having the lowest average at 1.9 plots.
The high percentage of individuals engaged in agriculture in Nigeria, compared to more developed countries such as the United States and Europe where the agricultural population is approximately 2% and 4.5% respectively, illustrates the extremely low productivity and widespread subsistence farming that define Nigeria’s food system.
