IFC: Less than 5% Commercial Bank Lending Going to Agriculture is Serious Devt Gap

• Mobilises Nigerian financial institutions for African Finance Summit

Dike Onwuamaeze

International Finance Corporation (IFC) says with less than five per cent of commercial banks’ lending in Nigeria going to agriculture, the country suffers a serious development gap.

IFC made the statement yesterday in Lagos during a press briefing to mobilise Nigerian financial institutions to attend the oncoming “African Financial Summit 2026,” scheduled to hold in November in Luanda, Angola.

The theme of the summit is, “Making Capital Count: Unlocking Growth Through African Finance.”

Speaking during the press briefing, Divisional Director, Nigeria and Central Africa, IFC, Mr. Oliver Buyoya, said the corporation was developing a value chain analysis that would address the barriers hindering the flow of credit to agriculture. This became necessary because less than five per cent of commercial bank lending went to agriculture, Buyoya said.

Buyoya stated, “So I used that as an example of a serious development gap that we are facing in Nigeria, and frankly, across the whole continent.

“We have in Nigeria probably one of the most sophisticated banking sectors in Africa.

“And yet, one of the most important sectors of the economy receives less than five per cent of lending from commercial banks. That is a fact.

“We need to understand why that situation has been there for decades.

“Commercial banks are financial intermediaries and if a sector is being considered risky, then it is going to be extremely difficult to expect that a commercial bank will deploy money in that sector.

“That is the problem we are trying to solve. You need to look at that sector (agriculture) from a value chain standpoint. How do you move goods that are produced to markets?”

He said AFIS 2026 was an occasion to bring stakeholders in the financial service sub-sectors in the room and co-create solutions, whether for agriculture or infrastructure financing.

Buyoya said, “We are working, putting together platforms, programmes that would mobilise funding from different sectors.

“We partner to help accessing finance from commercial banks to agriculture because on average less than five per cent of commercial bank lending go to agriculture.

“And that cannot continue if we want to ensure food security for our population and create jobs.”

In his remarks, Director of AFIS, Mr. Hicham El Morabet, said the paradox about Africa was that return on regional equity for financial institutions was about 90 per cent, while the cost of finance was so high that operators in the real sector struggled to finance their businesses.

El Morabet said the six strategic priorities of the summit were finance that reached the real sector; scale with purpose; technology on African terms; turning African savings into African investments; integration that made scale possible; and urgency in the rules of finance.

According to him, AFIS 2026 will move from dialogue to implementation since the first five years of the summit were focused more on how to make the African financial industry stronger for the future.

He said, “We are moving from how to make the industry stronger to how to make this industry a way to channel investments and financing to the real economy.

“I think we already know this diagnosis, but maybe some figures are important here to keep in mind.

“For the African banking sector, for example, the average return on regional equity is around 90 per cent, and it is the double of the global average.

“Also, in terms of number of assets under management for African institutional investors, there are more than $2 trillion assets under management.

“So, the financial sector is doing well but the paradox is that the cost of capital and the cost of financing in general is high, and the real economy struggles to find the right financing to finance infrastructure projects, and also all corporate development projects.

“So, this is why we chose this theme this year.”