Nigeria Senate seeks USD 3B support for smallholder farmers amid rising food insecurity

NIGERIA – In a move to support Nigeria’s agriculture sector, the Senate has called for a USD 3 billion financial package aimed at boosting smallholder farmers, an essential group within the nation’s food production landscape.

The Senate’s call, announced during a plenary session, comes as Nigeria faces record-high food inflation, reaching 37.77% in September 2024, according to the National Bureau of Statistics.

This new financial initiative, proposed by Anambra State MP Uchenna Okonkwo, urges the Central Bank of Nigeria (CBN) to increase agricultural loans from 1.4% to 7% of total loans over the next five years.

Half of this allocation would specifically target smallholder farmers through microfinance institutions and agricultural cooperatives.

Strengthening Nigeria’s agriculture amid economic challenges

Agriculture accounts for approximately 22.7% of Nigeria’s GDP, with nearly 60% of the country’s workforce engaged in the sector.

Despite this, smallholder farmers, who produce more than 90% of Nigeria’s staple crops, continue to face barriers such as limited access to financing, inadequate infrastructure, and vulnerability to climate change.

These challenges are felt even more deeply as food insecurity grows across the country, leading lawmakers to emphasize the urgent need for actionable support.

Okonkwo stressed the importance of making these loans more accessible by adjusting interest rates to a range between 7.5% and 10.5%. “Reducing interest rates is critical to ensure that loans benefit those who need them most.”

Making financing accessible to smallholder farmers will help strengthen our agricultural value chains and ultimately boost productivity,” he stated.

Smallholders: Key to national food security

Smallholder farmers are vital to Nigeria’s food production. Often operating on small plots with minimal equipment, these farmers grow key staples such as rice, sorghum, cassava, and yams, which are essential to daily food consumption across the nation.

However, with over 72% of smallholders living on less than USD 1.90 a day, many struggle to adopt more advanced farming practices or invest in better tools, limiting their productivity.

The initiative also aligns with the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), which was established by the CBN in 2011 as a USD 500 million institution focused on reducing the risks associated with agricultural lending.

NIRSAL has been instrumental in creating better lending practices that benefit farmers, and the proposed USD 3 billion package aims to expand this impact significantly.

Reducing dependence on imports

Nigeria has increasingly relied on imports to meet its food demands, which puts additional strain on its economy, especially in times of global supply chain disruptions.

According to the National Bureau of Statistics, stabilizing food production locally is now a pressing priority.

Okonkwo’s proposal represents a step toward making Nigeria more self-sufficient, providing smallholder farmers with the tools they need to combat productivity challenges and support national food security.

“Investing in our farmers is investing in our future,” added Okonkwo. “As a country, we must ensure that our farmers are empowered to produce enough food, and this USD 3 billion will be a crucial step in making that happen.”

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