What Afreximbank’s $1bn financing means for Nigerian smallholder farmers

One of the major challenges facing Nigeria’s smallholder farmers has been lack of financing and mechanised tools. This has lingered for many years and has affected efficiency and productivity of yields. Although successive governments have tried to intervene in many ways, stakeholders lamented that smallholder farmers in Nigeria were not able to access the Central […]

One of the major challenges facing Nigeria’s smallholder farmers has been lack of financing and mechanised tools.

This has lingered for many years and has affected efficiency and productivity of yields.

Although successive governments have tried to intervene in many ways, stakeholders lamented that smallholder farmers in Nigeria were not able to access the Central Bank of Nigeria (CBN) interventions in the oil palm sector.

For instance, the Anchor Borrowers’ Programme of the Federal Government was launched to provide seeds and cash to farmers to grow crops. The participating Banks working with CBN were expected to lend to Anchors at nine per cent per annum for onward disbursement to farmers.

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However, the CBN interventions were said to be focused on the big plantation owners with impressive cash flow and better ability to pay back the loans. So smallholder farmers are not able to access the interventions.

Stakeholders therefore called for the creation of a special financing scheme to enable smallholder farmers to have access to funds and improved technologies

 

Afreximbank’s $1bn pact with Bank of Agric for Nigerian smallholder farmers

Consequently, the Bank of Agriculture (BOA) recently signed a deal with African Export-Import Bank (Afreximbank) to mobilise up to $1 billion for direct financial support for smallholder farmers and the entire agricultural value chain, from primary production to market, in the country.

The partnership follows the approval granted by President Bola Ahmed Tinubu, for the establishment of a National Food Security Fund, which will be a revolving matching fund in partnership with State Governments, called “The National Smallholder Farmers Fund.”

The fund is designed to close the systematic financial gap faced by Nigeria’s smallholder farmers by providing access to affordable credit for critical inputs, mechanisation and structured market linkages.

By equipping farmers with access to capital and mechanisation equipment, the fund will enable increased productivity, value addition through processing, and stronger integration to national and continental markets.

Nigeria’s smallholder farmers are responsible for over 90% of the nation’s agricultural output, yet struggle with inadequate access to finance, poor adoption of improved technologies and fragmented market access.

Also, currency swap arrangements to enable dollar denominated funding from Afreximbank to be efficiently converted to local currency for on-ward lending to the farmers by BOA. By implementing this mechanism, the partnership will facilitate easier access to international capital markets, while shielding smallholder farmers from the risks associated with exchange rate fluctuations.

The Bank of Agriculture (BOA), was represented by its Managing Director/Chief Executive Officer, Mr. Ayo Sotinrin while the African Export-Import Bank (Afreximbank), was represented by the Executive Vice President for Intra-African Trade and Export Development, Mrs. Kanayo Awani.

The agreement was finalised during the recently concluded Intra-African Trade Fair (IATF) 2025 in Algiers, Algeria.

Speaking at the signing, Sotinrin noted that the deal is a strategic intervention designed to secure Nigeria’s agricultural future.

“This is more than just a fund; it is a bold commitment to ensuring our nation’s food security,” he said. “By joining forces with Afreximbank, we are unlocking opportunities for smallholder farmers to move beyond subsistence farming into sustainable and profitable agribusiness.”

Commenting on the deal, Mrs. Kanayo Awani said: “Smallholder farmers are an essential part of the agricultural value chain and represent important contributors to the growth of the agro-industry sector. By partnering with BOA to support the National Smallholder Farmers Fund, Afreximbank is supporting BOA to deliver greater impact in Nigeria’s quest for food security and economic development. The Fund will provide critical liquidity and assuage the hardship faced by the smallholder farmers by extending crucial financing access to the previously underserved group.”

 

What this means to farmers

An agricultural economist, Basil Julius told Daily Trust that what Nigerian farmers have been missing is innovative approach to farming due to lack of finance and funding, adding that the funding will go a long way in boosting growth.

“We need to introduce machines in the cultivation of our rice and other crops if truly we are serious about attaining self-sufficiency and we have been lacking that because of funding. As such I expect that the new funding agreement with Afreximbank will foster growth for small holder farmers and boost yield for Nigeria,” he said.

He noted that the bulk of the food produced in the country are still grown with cutlasses and hoes by smallholder farmers who grow over 70 per cent of what Nigeria eats as a nation.

“Available statistics show that Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO)’s 1.5hp/hectare recommended tractor density for Africa and other developing countries.

“When measured on mechanisation scale in 2003, 12 years ago, Nigeria had only 30,000 tractors and currently adding 1,000 new ones each year, which is still not considered sufficient in replacing the ones that are aging, broken down and worn out. Therefore I believe the funding by Afreximbank will change this narrative,” he said.

Also, Peter Dama Chairman,  Competitive African Rice Forum  stated that rice is a very strategic crop, deserving of policy continuity to protect over 5 million livelihoods directly dependent on its value chain, as small holder farmers have struggled over the years to add yield

He said the Fund will go a long way to create a national rice buffer stock and offtake mechanism, to stabilize market prices during harvest cycles.

He added that the Fund should  “Support paddy production through access to irrigation where we can have double Paddy production circle that is through rain fall and irrigation, supply of affordable inputs, mechanization, and affordable low interest agriculture financing.”