Farmers can now access bank loans to expand production and invest across the agricultural value chain The loans are offered through the ACGSF managed by the Central Bank of Nigeria The programme guarantees up to 75% of loans issued by participating banks to farmers Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends. Farmers and agribusiness owners seeking to expand their operations can access financing through the Agricultural Credit Guarantee Scheme Fund(ACGSF), a federal government initiative designed to improve credit flow to Nigeria’s agricultural sector. The scheme is managed by the Central Bank of Nigeria and provides guarantees on agricultural loans issued by banks. FG opens agricultural loan scheme for farmers through CBN Photo: Henk Badenhorst Source: Getty Images The programme encourages more banks to extend credit to farmers and agribusinesses seeking capital to grow their operations. Through the initiative, farmers can secure loans to increase production, invest in equipment, expand farmland, or scale other aspects of their agricultural businesses. The programme forms part of broader efforts by the federal government of Nigeria to strengthen food security and support the growth of the agricultural economy. The share capital under the programme currently stands at N50 billion. How farmers can apply for the ACGSF Farmers interested in the scheme can begin the application process by visiting a participating commercial bank or microfinance bank. Applicants are required to request an agricultural loan under the ACGSF and complete the prescribed application form through the bank. The lending institution will review the request and forward it to the appropriate CBN office for further processing. Loan applications are subject to credit checks through the Credit Bureau and Credit Risk Management System, while officials from the Development Finance Office may conduct site visits to verify the agricultural project. Key features of the ACGSF scheme include: Government guarantee covering up to 75% of loan defaults issued by banks Access to financing for smallholder farmers and agribusiness operators Support for activities across the agricultural value chain, including crop production, livestock farming, and agro-processing Funding access through licensed commercial and microfinance banks Under the programme, the maximum non-collateralised loan is N100,000, while collateralised loans can reach up to N50 million, depending on the borrower’s credit profile and the bank’s lending conditions. Acceptable collateral may include land charges, movable property, warehouse receipts, stocks and shares, life insurance policies, personal guarantees, or other security recognised by the lending bank. FG encourages banks to lend more to farmers through credit guarantee Photo: Bloomberg Source: Getty Images Interest rebate support for farmers Farmers who obtain loans under the scheme may also benefit from the Interest Drawback Programme (IDP) introduced in 2003. The programme offers a 40% rebate on the interest paid by farmers who repay their loans fully within the agreed loan tenure, helping to reduce borrowing costs and encourage timely repayment. The IDP has a capital base of N2 billion, jointly funded by the Federal Government and the Central Bank of Nigeria. Loan default and guarantee coverage In the event of loan default, the Central Bank guarantees 75% of the outstanding balance after the lending bank has taken steps to recover the debt and realised any pledged security. Banks are expected to continue recovery efforts even after receiving compensation under the guarantee scheme. FarmerMoni scheme Earlier, Legit.ng reported that the federal government has officially opened applications for the FarmerMoni Scheme, providing interest-free loans of up to N300,000. The programme, under the Government Enterprise and Empowerment Programme (GEEP), is aimed at strengthening smallholder farmers, improving productivity, and promoting grassroots agricultural growth. It allows beneficiaries to access essential farming inputs, including seeds, fertilisers, and equipment. Source: Legit.ng