Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 17)


According to the data on credit allocation by sector released by the Central Bank of Nigeria (CBN), Deposit Money Banks (DMBs) ‘s allocation to the agricultural sector rose to approximately N1.458 trillion in December 2021 from N1.049 trillion recorded in December 2020.1 This represents a 38.88 percent increase year-on-year. The CBN’s development financing initiatives, including the Anchor Borrowers’ programme, which involves DMBs in funds disbursement to farmers, partly drove this increment in credit allocation to the agricultural sector. The challenge of lack of access to credit facilities to purchase improved seedlings and modern facilities lowers agricultural productivity and contributes to food insecurity. The high food inflation (above 15 percent in 2021)2 indicates the persistence of food shortages, which might be attributable to non-financial factors constraining production, such as insecurity and poor road networks connecting farmlands. Addressing food shortages and achieving low food inflation requires a combination of financial and non-financial interventions from the government. First, the government needs to sustain initiatives that increase farmers’ access to finance and partner with the private sector to unlock innovative agricultural financing tools. Second, the government needs to guarantee farmers’ security and construct more roads connecting farmers to the markets. 

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