How to Make Nigeria’s Smallholder Farmers Creditworthy: A Simple but Effective Approach

by Toluwalemi Oluwadare on 06 Feb 2019 • 5 comments
4 min read

For many of the smallholder farmers in Nigeria, farming is not a job, it is a way of life. However, credit institutions consider these smallholder farmers in Nigeria uncreditworthy due to lack of adequate prerequisites (collateral). According to Dr Usman Bugaje, the Convener of Arewa Research and Development Project (ARDP), over 90 per cent of smallholder farmers in Nigeria did not access loan facilities from conventional banks. As a result of this, there is low agricultural productivity and low revenue base among the smallholder farmers in Nigeria. 

A creditworthy farmer, to put it briefly, is one who can safely be lent money. Agricultural credits are what improve and increase yields. They help small-scale farmers improve their practices and have access to better-quality seeds and fertilizers. It is no surprise, then, that some of the smallholder farmers in Nigeria cannot access loan facilities from financial institutions.

Luckily, we've come up with a simple approach to make Nigeria’s smallholder farmers creditworthy. So let's just dive right in!

  • An Extensive Workshop
A few weeks ago, we highlighted the reasons why Nigeria’s smallholder farmers cannot access credit facilities and one of the reasons was the lack of awareness on the farmers part. There is a knowledge gap among smallholder farmers when it comes to agricultural finance. Not many smallholder farmers in Nigeria have access to useful and affordable financial products and services that meet their needs.

A workshop where farmers can improve their understanding of agricultural finance and help them get ready to apply for financing for their farm-related venture is of great benefit in the long run. This training ensures that they are well versed in the nitty-gritty of agricultural finance which includes concepts like credit score, collateral, adverse selection, moral hazard, among others. They learn that their credit history and creditworthiness are very important while securing a loan.

In addition, the workshop, at no cost, should aim at bridging the knowledge gap among small-scale farmers to make them productive and have equal opportunities to get access to financial services.

The Farmer Business School (FBS) organized by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a perfect example of a workshop that aims at improving the skills of farmers. This initiative helps the farmers to be more productive and aims at promoting entrepreneurship and business skills of smallholder farmers. 

The approach builds on experiential learning and targets a mindset change of farmers to recognize themselves as entrepreneurs and investors. These are crucial prerequisites for the adoption of improved techniques, use of market opportunities and investments in agricultural production and consequently improved productivity and quality, diversified family income and nutrition.

Source: GIZ

Another significant example is the programme provided by the United States Agency for International Development (USAID). The USAID offers assistance to Nigeria's smallholder farmers to boost their farming business in Nigeria. This way, farmers are educated on sustainable means to have access to useful and affordable financial products. Consequently, this leads to improved performance on their farms, increase in revenue and inevitably, improves food security in the country.

Still not convinced?

Most likely. And rightly so, because cases do exist where farmers may not have access to workshops.

What is the way forward then? In such cases, an extension agent plays a crucial role in ensuring the creditworthiness of farmers.

  • Extension Agents
An extension agent is an adviser employed by the government or private firms to assist people in rural areas with methods of farming and home economics. The extension agent is responsible for providing the knowledge and information that will enable a farmer to understand and make a decision about a particular innovation or concept.

Furthermore, extension agents improve the creditworthiness of Nigeria’s smallholder farmers in Nigeria by carrying out the necessary activities required in applying for agricultural credit. The agents make sure that loans are paid back thereby increasing the credit score of a smallholder farmer. The agent's work is usually highly structured and based on existing government policies and programmes.

The N-power Agro Volunteers Corps Program is an example of a program that offers this kind of service across the country. They disseminate the knowledge that has been aggregated by the Federal Ministry of Agriculture and Rural Development in the area of extension services. 

One may suggest that credit institutions give smallholder farmers loans in cash which at first sight, looks like a great plan. But technically, what the farmers get is the power of purchase. The money itself is ineffective as it does not grow anything and the farmer may decide to spend the money instead of cultivating. The funds granted if converted into physical assets increases productivity and income. 


Annemarie Matthess, Ayo Akinola, Benjamin Hinampong Asare Emmanuel Hell Makong, Veronika Kling, Daria Hasse. August 2017. “Farmer Business School: A guideline for introduction and management”.

Nigerian Farmers Benefit From USAID Agricultural Initiative. Retrieved from Accessed on 7 August 2018.

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  1. Olakunle Ojo

    08 Feb 2019 AT 05:28 AM

    This is a very interesting and helpful article. Many smallholder farmer can really be supported if right information like this get down. The role of extension officers is imperative. Hoped this could be practicalities.
  2. Olakunle Ojo

    08 Feb 2019 AT 05:30 AM

    This is a very interesting and helpful article. Many smallholder farmer can really be supported if right information like this get down. The role of extension officers is imperative. Hoped this could be practicalities.

    08 Feb 2019 AT 06:41 AM

    Very informative
  4. Hannatu Soni

    12 Feb 2019 AT 09:32 AM

    Small holder women farmers group spread in all the states in Nigeria is ready to work with any Org that has us at heart. SWOFON (Small Scale Women Farmers Organization Nigeria) has been advocating to Policy makers and Ministries for fulfilment of the Malabo declaration of 10% National Budget allocation for Agriculture from the present 2% and also Small holder women inclusion in policy, implementation and monitoring of the budget processes. This is done by building the capacity of the smallholder woman farmer.
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