This post contains information about Agricultural loans in Nigeria, a list of the available farmers’ loans, how to apply, and lots more.
Agriculture is the backbone of the Nigerian economy, providing employment and food security for millions of people. Despite its significance, the sector has faced numerous challenges, one of which is access to credit.
Many farmers struggle to obtain loans to invest in their farms, purchase equipment and improve their production. This lack of access to credit hinders the growth of the agricultural sector, and ultimately, the overall development of Nigeria.
The Central Bank of Nigeria (CBN) and other financial institutions have implemented various agricultural loan schemes to address this issue. In this post, we will discuss the different types of available agricultural loans in Nigeria, how to apply for the loans, and also some of the requirements to meet to access them.
Without further ado, let’s get started!
How to Get Agric Loan in Nigeria
The process for applying for agricultural loans in Nigeria may vary depending on the specific loan scheme or bank you are applying to. However, in general, the process may involve the following steps:
- Research: Research different loan schemes and banks to find the one that best suits your needs. Check the interest rate, the term of the loan, and the collateral requirement. We’ve provided some below anyways.
- Prepare a business plan: Prepare a business plan outlining your proposed agricultural project, including details on the type of crop or livestock to be raised, the expected yields, and the projected costs and revenue.
- Prepare required documentation: Gather all required documentation, such as proof of citizenship, age, farming experience, collateral, insurance, and credit history.
- Submit your application: Submit your loan application to the relevant bank or loan scheme, along with all required documentation.
- Wait for approval: Wait for the loan application to be processed and approved. This process may take several weeks to several months depending on the bank or loan scheme.
- Sign loan agreement: Once the loan is approved, sign the loan agreement and any other necessary paperwork.
- Disbursement: After the documentation is completed, the loan will be disbursed to your account.
See Also: List of Federal Government Loans for Small Businesses in Nigeria to Apply for Now
Types of Agricultural Loans in Nigeria
Mainly, agricultural loans in Nigeria are provided by the government. However, some Nigerian banks also offer these types of loans.
The following are some of the available loans for farmers in Nigeria:
1. CBN Anchor Borrowers’ Programme
This is a scheme launched by the Central Bank of Nigeria (CBN) to provide loans to smallholder farmers to boost agricultural production and increase food security. The loans are provided at a single-digit interest rate, and are aimed at small-scale farmers who are engaged in the cultivation of rice, wheat, maize, cotton, cassava, and livestock production.
Read Also: List of Available Loans for Salary Earners in Nigeria & How to Apply
2. Bank of Industry (BOI) Agricultural Loans
If you’re looking for a low interest agric loan in Nigeria BOI also keeps its interest rate at a single digit for farmers and agribusiness owners. The loans can be used for activities such as crop production, fisheries, poultry, and livestock production.
3. Central Bank of Nigeria (CBN) Agricultural Credit Guarantee Scheme Fund (ACGSF)
This is another federal government agric loan scheme in Nigeria, and is aimed at providing collateral-free loans to small-scale farmers. The scheme provides guarantees for loans given by participating financial institutions, which in turn allows the farmers to access loans without having to provide collateral.
Check Out: Top 17 Agricultural Investment Platforms in Nigeria
4. Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)
This is a scheme aimed at reducing the risk associated with agricultural lending by providing guarantees to financial institutions that lend to farmers and agribusinesses. The scheme also provides technical assistance to farmers to help them improve their agricultural practices.
Check Out: List of Nigerian Banks that Offers Loans Without Collateral
5. Bank of Agriculture (BOA)
BOA is a federal government-owned development finance institution that provides agricultural loans in Nigeria to farmers and other agricultural operators. The bank provides loans for activities such as crop production, fisheries, livestock production, and agro-processing.
BOA has the mandate to provide agricultural credit to farmers, processors and other stakeholders in the agricultural value chain at single-digit interest rate. BOA also provides technical assistance and advisory services to farmers and agribusinesses. The bank also provides financing options to support the implementation of the Federal Government’s agricultural policies and programmes.
6. First Bank of Nigeria
First Bank provides a range of agricultural financing options for farmers, including loans for crop production, livestock production, and agro-processing. The bank has a specific agricultural financing department that offers customized loans to farmers and agribusinesses. They also offer an array of value-added services to support the growth and development of the agricultural sector.
Related: List of Online Loans with Monthly Payment in Nigeria
7. Commercial Agriculture Credit Scheme (CACS)
CACS is another government loan for farmers in Nigeria. It allows you to access a minimum of N50m and a maximum of N2bn worth of agric loan in Nigeria. The tenor is based on the gestation period of the project to be financed, and the interest rate is 9%.
Agric Loan Requirments in Nigeria
To be eligible for agricultural loans in Nigeria, farmers and agribusinesses typically need to meet certain criteria. These may include:
- Citizenship: Most agricultural loan schemes in Nigeria require the borrower to be a Nigerian citizen.
- Age: Some loan schemes have specific age requirements, such as being over 18 years old.
- Farming Experience: Most loan schemes require the borrower to have a certain level of experience in farming or agribusiness.
- Business Plan: As a borrower, you may need to provide a business plan outlining your proposed agricultural project, including details on the type of crop or livestock to be raised, the expected yields, and the projected costs and revenue.
- Collateral: Some loan schemes may require you to provide collateral, such as land or other assets, to secure the loan.
- Credit History: As a borrower, you may need to have a good credit history, as most of loan schemes will require the creditworthiness of borrowers.
- Insurance: Some loan schemes require you to have insurance coverage for your agricultural project.
Related: List of Fake Loan Schemes to Avoid in Nigeria Right Now
Agricultural Loan in Nigeria – FAQs
Which bank is best for agriculture loan in Nigeria?
Some of the best banks for agricultural loans in Nigeria include Bank of Industry (BOI), Bank of Agriculture (BOA), and First Bank of Nigeria.
Where to get loan for agriculture in Nigeria?
Some of the lenders that offer Agric loans in Nigeria include the Central Bank of Nigeria (CBN), Bank of Industry (BOI), Bank of Agriculture (BOA), and First Bank of Nigeria.
How long does it take to get approved for an agricultural loan in Nigeria?
The time it takes to get approved for a farmers loan in Nigeria may vary depending on the loan scheme or bank. It can take several weeks to several months for the application to be processed and approved.
What is the interest rate for agriculture loans in Nigeria?
The interest rate for agricultural loans in Nigeria can vary depending on the loan scheme or bank you are applying to. The Central Bank of Nigeria (CBN) provides some agricultural loan schemes at a single-digit interest rate such as the Anchor Borrowers’ Programme (ABP) which is at 9% interest rate.
However, interest rates for agricultural loans from commercial banks and microfinance banks can be higher and can range from around 15% to as high as 25%. Some banks also offer agricultural loan schemes with flexible interest rates, where the interest rate is subject to change based on the inflation rate.
How can I get CBN agricultural loan?
To get a CBN agricultural loan, farmers and agribusinesses need to research the different loan schemes offered by the CBN and find the one that best suits their needs, prepare a detailed business plan, gather all required documentation and then submit their loan application to the CBN or to any of the CBN-approved Participating Financial Institutions (PFIs). The process may take several weeks to several months depending on the loan scheme and the bank.
Is collateral required for agriculture loan?
Yes, collateral is generally required for agricultural loans in Nigeria, as it serves as a security for the loan. Although the type and value of collateral required can vary depending on the loan scheme or bank.
How do I get government funding for farming?
Farmers and agribusinesses can get government funding for farming in Nigeria by applying for loan schemes and programs offered by the Central Bank of Nigeria (CBN), Bank of Agriculture (BOA), Federal Ministry of Agriculture and Rural Development (FMARD), International Development Organizations and State governments.
How to get Agric loan without collateral in Nigeria?
Although it may be difficult to get the opportunity, microfinance banks and government-backed programs may offer agricultural loans without collateral in Nigeria.
Conclusion
Agricultural loans in Nigeria play a vital role in the growth and development of the country’s agricultural sector. With the right policies and support from government and financial institutions, smallholder farmers and agribusinesses can access the funding they need to improve their operations and increase productivity.
However, challenges such as high interest rates and lack of collateral can still make it difficult for many farmers to access these loans. Regardless, I believe this post has walked you through everything from how to apply for agric loans in Nigeria, the available types, and how to be eligible for them.
Cheers!
