The National Agricultural Development Fund is set to introduce a Credit Risk Guarantee scheme aimed at addressing the financing gap in Nigeria’s agricultural sector.
The Executive Secretary of NADF, Mohammed Ibrahim revealed this during a media engagement in Abuja on Thursday.
Ibrahim stated that the initiative is a critical step in supporting farmers and businesses involved in agriculture, especially given the sector’s challenges with accessing affordable finance.
“We are 80 percent ready to sign an agreement by the close of this year that will attach a credit risk guarantee and insurance cover to every project we fund,” Ibrahim said.
The guarantee, he explained, would help mitigate the risks that banks face when lending to agricultural ventures, encouraging more financial institutions to get involved in the sector.
The agricultural financing gap in Nigeria is estimated at $180m, with the NADF focusing on blended financing that combines public funds, grants, and private sector investments.
“We take these challenges very seriously,” Ibrahim added, acknowledging the difficulties in financing agriculture, a sector that requires patient capital and tailored financial products.
He said NADF is working to ensure that insurance products are designed to meet the specific needs of agriculture, such as crop yield index insurance and livestock insurance.
Ibrahim noted that generic insurance policies were insufficient for the unique risks faced by agricultural businesses, particularly in sectors like livestock and fisheries.
The NADF’s approach is grounded in a five-year strategic plan with a focus on primary agricultural production, particularly seeds and fertilizers, and mechanization.
The Fund is also prioritizing infrastructure development, especially irrigation systems, to mitigate the impact of climate change on farming.
“Irrigation is crucial for dry season farming, and we are prioritizing it as part of our strategy to enhance agricultural productivity,” Ibrahim said.
He added that the NADF is committed to fostering financial inclusion, with a specific focus on women and underserved communities.
Ibrahim emphasised that, despite its governmental nature, NADF is focused on creating a robust financial framework that goes beyond traditional public sector funding.
“Gone are the days when public money was simply thrown at agricultural problems without a clear strategy. Our approach is thorough, with strong frameworks and stakeholder engagement,” he said.
