Only 7% of rural communities in Nigeria receive agricultural loans from banks – NBS

According to a National Bureau of Statistics (NBS) report that was just released, as of 2022, just 7% of farming communities in Nigeria reported receiving microcredits from banks.

The National Bureau of Statistics (NBS), the Federal Ministry of Budget and Planning, the World Bank, the FAO, and other organizations collaborated on the “National Agricultural Sample Census” report.

It stated that, at 26% and 14%, respectively, farmers in Lagos and Ogun states were the most likely to receive agricultural loans from banks.  

Additionally, according to the research, just 11% of agricultural towns had access to bank loans; the majority of areas nationwide reported significantly lower percentages.

Additionally, the survey showed 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 concluded that because cooperative organizations require less collateral than traditional banks, these farming communities would rather borrow money from them.

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.”

Low bank credit to the agricultural industry. 

The study clarifies the challenges faced by farming communities in obtaining finance to enhance their productivity and augment the nation’s food production as a whole. Just N2.26 trillion, or 5.07%, of the N44.54 trillion in loans that banks made to the private sector in 2023 went to the agriculture sector, which accounts for more than 20% of the GDP.

In addition, the Central Bank of Nigeria (CBN) report at the end of the year showed that, out of the top 10 sectors of the Nigerian economy, the sector received the least amount of commercial bank loans.

Farmers make up 70% of Nigerian households

The report also disclosed that around 40.2 million households, or 70% of all households in the nation, are engaged in agriculture; the majority of these homes—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.

Nigeria has a disproportionately large number of individuals engaged in agriculture compared to more developed countries such as the United States and Europe, where the percentage of the population engaged in agriculture is approximately 2% and 4.5%, respectively.

This illustrates the extremely low productivity and widespread subsistence farming that define the food system in Nigeria.