The National Food Security Fund of the federal government of Nigeria has received a massive boost with a landmark deal signed between the Bank of Agriculture (BOA) and the African Export-Import Bank (Afreximbank) at the recently-concluded Intra-African Trade Fair (IATF) 2025 in Algiers, Algeria.
Both lenders will join forces to mobilise up to $1 billion for direct financial support for smallholder farmers and the entire agricultural value chain, from primary production to market, in Nigeria.
According to a statement, the funding support will close the systemic financial gap faced by Nigerian farmers by providing access to affordable credit for critical inputs, mechanisation, and structured market linkages.
This will enable them to increase their productivity, value addition through processing, and stronger integration into national and continental markets.
The chief executive of BOA, Mr Ayo Sotinrin, described the fund as a “bold commitment to ensuring our nation’s food security.”
“By joining forces with Afreximbank, we are unlocking opportunities for smallholder farmers to move beyond subsistence farming into sustainable and profitable agribusiness,” he added.
On her part, the Executive Vice President for Intra-Africa Trade and Export Development at Afreximbank, Mrs Kanayo Awani, said, “Smallholder farmers are an essential part of the agricultural value chain and represent important contributors to the growth of the agro-industry sector.
“By partnering with BOA to support the National Smallholder Farmers Fund, Afreximbank is supporting BOA to deliver greater impact in Nigeria’s quest for food security and economic development.
“The fund will provide critical liquidity and assuage the hardship faced by the smallholder farmers by extending crucial financing access to the previously underserved group.”
Business Post learned that Afreximbank would provide guarantees for loans disbursed by BOA, thus reducing credit risk and extending financing access to previously underserved smallholder farmers.
There is also a currency swap arrangement to enable Dollar denominated funding from Afreximbank to be efficiently converted to Naira for on-ward lending to the farmers by BOA. By implementing this mechanism, the partnership will facilitate easier access to international capital markets, while shielding smallholder farmers from the risks associated with exchange rate fluctuations.