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Bridging the Gap for
Unbanked and
Farmers In Nigeria
through Tech

Amid worries about food production in Nigeria, Yusuf Adeojo Ph.D discusses how unbanked and underbanked farmers could have access to agricultural financing.


Agriculture is a major economic driver in Nigeria, however, many rural farmers still struggle due to limited access to modern techniques and financing. According to recent data from the World Bank, less than 40% of rural Nigerians have access to formal financial services, significantly lagging behind their urban counterparts. This financial exclusion has palpable consequences; for instance, it is estimated that up to 80% of smallholder farmers lack access to credit, hindering their ability to invest in essential inputs, machinery, and techniques that could enhance productivity and yield. 

Adequate financing for subsistence farmers holds the potential to ensure a more equitable distribution of food resources year-round, particularly during periods of low agricultural production. However, achieving this requires strengthening financial and technological structures, especially in rural areas where geographical remoteness and lack of financial infrastructure hinder accessibility to traditional banking services. To this end, leveraging digital finance has become  crucial to expedite financial integration, addressing these barriers effectively.

While Nigeria has seen the emergence of some digital financial products tailored for subsistence-level agriculturalists, their impact remains limited due to several factors. These include lack of awareness among relevant stakeholders, lack of electricity and internet network, inadequate customization of products to meet specific user needs, and a prevailing preference for informal financial services among farmers. To address these challenges and promote sustainable financial inclusion, a targeted integrated approach is imperative. This approach has to include strategies such as simplified  mobile banking, establishment of agent networks, redefining indigenous finance in light of modern infrastructures, e.t.c. 

Understanding the Challenges

Lack of access to financial services, loans and grants by farmers in the rural regions in Nigeria contributes to the poor growth of the agricultural sector. Official statistics show that over 70% of the country’s estimated 200 million population are engaged in active farming in Nigeria and over 70% of this farming populace are considered to be rural farmers and those without bank accounts. This is further supported by the data from the  EFInA Access to Financial Services in Nigeria 2016 survey.

The formal financial service providers meet the needs of only 28.8 percent of the population (39.7 percent urban and 12.8 percent rural) and nine States and the Federal Capital Territory, Abuja (FCT) had 61 percent of all automated teller machines (ATMs) in Nigeria; with a significant number of these ATMs located in the urban centers. This shortage in rural areas is pioneered by poor road and satellite networks, unavailability of well secured banks, inadequate information to farmers, among others. 

Introducing Innovative Solutions

In this article, I aim to  explore in  brief the role of digital and mobile technologies in improving subsistence agricultural financing in Nigeria, while also advocating for constructive policies. These efforts are crucial for transforming and strengthening the delivery of financial services to unbanked and underbanked farmers. 

In addressing the financial challenges faced by subsistence farmers in Nigeria, innovative solutions tailored to their unique circumstances are essential for promoting financial inclusion and empowering rural communities.

One such solution is the implementation of biometric identification systems, which offer a secure and reliable means of verifying the identities of rural farmers. By capturing biometric data such as fingerprints or iris scans, financial institutions can establish digital identities for farmers, facilitating access to financial services without the need for traditional documentation.

Success factors for the effective deployment of biometric identification systems include comprehensive data gathering efforts, infrastructure development to support biometric authentication, clear regulatory frameworks governing data privacy and security, and public awareness campaigns to build trust and acceptance among rural communities.

Another innovative solution is the utilization of artificial intelligence (AI) for credit scoring, which holds promise for assessing the creditworthiness of unbanked and underbanked farmers. By analyzing diverse data sources such as credit history, future derivatives of their agro-produce. AI algorithms can provide accurate assessments of farmers’ credit risk, enabling financial institutions to extend credit more effectively.

Key success factors for AI-powered credit scoring systems include access to extensive data, technical expertise in machine learning and data analytics, collaboration with financial institutions to refine AI models, and continuous monitoring and evaluation to ensure performance optimization and regulatory compliance. 

Mobile banking and digital payment platforms represent another innovative solution to address the financial needs of subsistence farmers in Nigeria. By leveraging mobile phones, which are becoming increasingly prevalent even in rural areas, farmers can access a range of financial services including savings accounts, money transfers, and digital payments.

Success factors for mobile banking and digital payment platforms include extensive mobile network coverage, user-friendly interfaces tailored to individuals with limited digital literacy, robust security measures to protect financial transactions, and the expansion of agent networks to facilitate cash-in and cash-out transactions in remote rural areas.

Blockchain technology offers yet another innovative solution for promoting financial inclusion among subsistence farmers in Nigeria. By providing transparent and tamper-proof transaction records, blockchain technology enhances trust and accountability in financial transactions, particularly in environments with limited access to traditional banking services.

Success factors for blockchain-based agricultural financing platforms include ensuring data integrity and immutability, establishing decentralized governance structures to prevent single points of control, leveraging smart contract automation to streamline transaction processes, and adhering to interoperability standards to facilitate seamless integration with existing financial infrastructure.

Finally, capacity building and financial literacy programs play a crucial role in empowering subsistence farmers to make informed financial decisions and access formal financial services. Tailored training curricula, local community engagement, multi-stakeholder collaboration, and monitoring and evaluation frameworks are essential success factors for the effective implementation of capacity building and financial literacy programs. By leveraging these innovative solutions and success factors, stakeholders can work together to promote financial inclusion and improve the livelihoods of subsistence farmers in Nigeria.

Case Studies and Success Stories

Some agritech initiatives have emerged in recent years to close the financial inclusion gap and empower unbanked and underbanked farmers. One such initiative is Farmcrowdy, a digital platform founded 10 months ago that connects smallholder farmers with investors, providing them with access to capital, technical expertise, and market linkages. Through Farmcrowdy, farmers can secure funding for agricultural inputs, equipment, and training, enabling them to improve their productivity and livelihoods.

Another notable example is Thrive Agric, which utilizes a crowdfunding model to finance smallholder farmers across Nigeria. Investors can fund specific agricultural projects and receive returns on their investment once the crops are harvested and sold. Thrive Agric provides farmers with access to credit, inputs, and agronomic support, helping them overcome the barriers to traditional financing and achieve higher yields and incomes.

There is also Crop2Cash, a mobile-based platform that offers digital financial services to rural farmers. Through Crop2Cash, farmers can access credit, savings, and insurance products directly on their smartphones, eliminating the need for physical bank branches and paperwork.

Through these targeted efforts, farmers in rural Nigeria are gaining the confidence and capabilities to embrace agritech solutions and improve their financial resilience. 

Nevertheless, there is a great need for the agritech innovations to pass through regulations by the CBN and SEC to ensure adequate protection of public funds under their care. Without these regulations, the interest of the farmers might be at stake. This calls for proper orientation of farmers so as to avoid such innovations that are not in sync with the federal government regulations. In addition, facilitating access to smartphones for underbanked farmers in rural areas would further enhance their participation in agritech solutions and improve their financial resilience.

Government Support and Policy Framework

The role of the government in financially supporting unbanked and underbanked farmers can not be overemphasized. Through targeted policies, programs, and regulatory frameworks, governments can promote financial inclusion and create an enabling environment for agritech innovations to thrive. In Nigeria, several initiatives and policy frameworks have been put in place to advance agricultural financing and promote financial inclusion.

One of such initiative is the Anchor Borrowers’ Program, launched by the Central Bank of Nigeria (CBN) in November 2015 to provide affordable credit to smallholder farmers across the country. Under this program, farmers receive loans for agricultural inputs such as seeds, fertilizers, and pesticides, with repayment linked to the proceeds from the sale of their produce. By providing farmers with access to credit at low interest rates, the program aims to increase agricultural productivity, reduce post-harvest losses, and enhance food security.

Looking to the Future

While initiatives like the Anchor Borrowers’ Program demonstrate commendable efforts to provide affordable credit to Unbanked and Underbanked  farmers, there remains a need for greater government intervention to ensure the effective implementation and widespread impact of such programs. It is essential for policymakers to prioritize transparency, accountability, and monitoring mechanisms to guarantee that these initiatives reach the intended beneficiaries and contribute to meaningful improvements in farmers’ livelihoods.

In addition to enhancing the implementation of existing programs, governments can take proactive steps to further support unbanked and underbanked farmers. One approach is to strengthen partnerships with private sector entities, NGOs, and international organizations to leverage additional resources, expertise, and networks. Furthermore, governments can invest in initiatives aimed at improving digital literacy and access to technology among underbanked farmers. This includes  training on the use of mobile phones, digital financial products, and agritech platforms. 

Governments and other relevant stakeholders should also prioritize infrastructure development to expand broadband connectivity and ensure reliable internet and road access in remote areas. Addressing challenges related to electricity access is critical for supporting the adoption of digital technologies and enabling farmers to engage effectively in digital finance and agribusiness platforms. By addressing these interconnected issues, policymakers can create an enabling environment for financial inclusion and empower unbanked and underbanked farmers to participate more fully in the formal economy.

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