In apparent reflection of the impact of insecurity, flooding and extreme weather on farming activities, agriculture sector growth fell by more than half in five years to 2022, defying the double digit increase in banks’ lending to farmers during the same period.
Financial Vanguard analysis of banks’ lending in the last 10 years showed that loans to farmers grew by 197 percent to N1.8 trillion in five years to 2022, faster than the 107 per cent growth recorded in the previous five years to 2016
As a result of the increased lending to farmers, the agricultural sector share of total banks’ lending rose to 6.16 per cent in 2022, from 3.3 per cent in 2017, translating to 2.86 percentage points increase in five years.
This is in contrast to the decline recorded in the previous five years, when the agricultural sector share of total banks’ lending fell from 3.4 per cent in 2011 to 3.3 per cent in 2016, representing 0.1 percentage point decline.
The agricultural sector contributes over 20 per cent to the nation’s Gross Domestic Product, GDP, and accounts for about 35 per cent of jobs in the country. But access to loans has been a major constraint as banks consider the sector high risk and hence unwilling to lend to farmers.
Thus for many years, the share of the agricultural sector in total banks’ credit has been lower than 5.0 per cent, with annual growth in lending to farmers below 2.0 per cent.
