to secure viable seeds, equipment and fertile land needed to run a successful farm which in turns yields an increase in agricultural production and poverty reduction.Generally, financial institutions are responsible for giving out agricultural credit to smallholder farmers. In Nigeria, there are nine (9) categories of financial institutions (Commercial Banks, Finance Companies (FCs), Micro-finance Banks (MFBs), among others) under the supervisory purview of the Central Bank of Nigeria (CBN). There are tens of financial institutions in Nigeria; yet, smallholder farmers have limited or no access to credit institutions.
Why?lender may need certain collateral before loaning a farmer and undoubtedly, the farmer may not meet the required collateral. Collateral includes property, belongings like sheep, goats, cow, equipment or vehicles, fixed deposits, among others. Financial institutions may decide not to lend smallholder farmers due to the risk of insufficient or inadequate collateral.The inability of smallholder farmers to repay loans equally contributes to the aforementioned challenge - lack of access to credit facilities. At the International Agric Expo 2018 held in Kano in October, the Deputy Governor of Kano State, Alhaji Nasiru Yusuf Gawuna, bemoaned that many farmers in Kano had refused to pay back loans which they benefited from. According to him, only four farmers out of 4,500 in Kano were able to repay the loans given to them. Situations like this only discourage the government and financial institutions in assisting smallholder farmers.
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Anderson, Jamie, and Danielle. 2018. “Executive Summary: CGAP National Surveys of Smallholder Households.” Washington, D.C.: CGAP
Akinnagbe Oluwole Matthew and Adonu Anthony Uchechukwu, 2014. Rural Farmers Sources and Use of Credit in Nsukka Local Government Area of Enugu State, Nigeria. Asian Journal o Agricultural Research, 8: 195-203.
Nigerian Gross Domestic Product Report(Q3 2017). Report date: November 2017.
Kano govt laments failure of farmers to repay loans. Retrieved from https://www.vanguardngr.com/2018/10/kano-govt-laments-failure-of-farmers-to-repay-loans/
Usman Bugaje: 90% of smallholder farmers don't access loan facilities. Retrieved from https://www.today.ng/news/nigeria/usman-bugaje-90-smallholder-farmers-access-loan-facilities-175883
CBN Supervision: Financial Institutions. See full list https://www.cbn.gov.ng/supervision/finstitutions.asp
Cover image by Nandhu Kumar on Unsplash
Read up on how Crop2Cash is digitising the agric value chain.