‘Why Nigerian agric products get rejected in foreign markets’

Mr. Kudzai Gumunyu, FCMB Divisional Head of Agribusiness and Non-Oil Exports in this interview highlighted how FCMB is transforming agribusinesses in Nigeria and empowering smallholder farmers to improve on Nigeria’s food security.

Nigeria’s economy is under pressure to diversify away from oil revenues. How is FCMB positioning its Agribusiness and Non-Oil Export division to support this objective?

Agriculture contributes about 25 percent of Nigeria’s GDP, and FCMB is working towards making agriculture contribute a similar proportion to the bank’s revenue and balance sheet. Nigeria’s dependence on oil makes the economy vulnerable to shocks in the petroleum sector, so diversification is essential.

Since establishing our agribusiness unit in 2012, we have focused on financing agribusinesses and non-oil exporters, helping clients grow and access wider markets. Our approach goes beyond lending. We support entire agricultural ecosystems, including farmers, aggregators, processors, commodity traders, exporters and service providers across value chains such as grains, livestock, ginger and other export commodities.

By strengthening these ecosystems, we are creating jobs, improving rural economies, increasing domestic production and supporting inclusive banking. We believe FCMB has made a significant contribution to the growth of Nigeria’s agribusiness sector.

What are the biggest financing challenges facing smallholder farmers and agribusiness operators in Nigeria?

Smallholder farmers face two major barriers: logistics and finance. Many operate in remote locations with poor infrastructure and insecurity. Financially, most lack formal land ownership and therefore do not have acceptable collateral for bank loans.

Banks are required to follow prudential lending guidelines, which makes collateral important. In addition, many farmers lack the financial records and business plans required for conventional lending. These challenges partly explain why agriculture receives only about 4 percent of banking sector assets nationally. At FCMB, more than 13 percent of our assets are dedicated to agriculture.

Agriculture also faces risks from weather uncertainty, commodity price fluctuations and climate change. Droughts, floods and changing rainfall patterns can significantly affect yields and loan repayment capacity. Middlemen often take a large share of farmers’ profits, reducing their income and resilience. These realities make agricultural financing challenging but also highlight the need for innovative solutions.

There has always been emphasis on value-chain financing. Can you explain how this model works and why it is important for agricultural growth?

Value chain financing means looking at every stage of agriculture, from the people who produce fertilisers, seeds and chemicals (input producers), right through to the farmers who use them.

We support these input producers, which helps our farmers grow. Farmers are at the heart of production.

Farmers use these inputs to grow their crops, which are then sold to aggregators and processors. Aggregators often work with processors, who supply manufacturers. Manufacturers turn these into goods for retailers and agents, and some products are even exported.

Alongside these roles, there are teams providing services like tillage, transport, digital tools and banking. Each one plays a part in keeping the value chain strong. We know that if any link is weak, especially for smallholder farmers, the whole system can be at risk. By supporting everyone in the chain, we help manage risk and keep agriculture moving forward.

This approach helps us keep cash flow steady and makes our risks more predictable, because we know everyone involved. We’ve made this our way of working.

How does FCMB balance profitability with the high-risk nature of agricultural lending?

Effective risk management begins before a loan is approved. About 75 percent of risk management occurs at the approval stage. We conduct thorough assessments of each project, examining expected yields, market access, repayment capacity, input availability and operational support.

Most of our lending decisions are based on cash flow analysis rather than relying solely on collateral. However, we still ensure appropriate safeguards are in place, including collateral, guarantees or other risk mitigants where necessary.

Agribusiness has become one of FCMB’s strongest growth sectors, and our non-performing loan ratio remains among the lowest in the industry. This demonstrates that agriculture can be financed profitably when risks are properly managed.

What measures has FCMB introduced to de-risk agribusiness financing?

Value chain financing is one of the ways we help make farming more secure for everyone involved. By working closely with our farmers, we can be sure they have access to quality seeds, quality fertilizer, and tillage services gotten from trusted providers.. We also make sure they’re farming in regions with the right conditions for success.

When it’s time to sell, our farmers have off-take arrangements with trusted aggregators who have the capacity to pay. These aggregators connect to processors with strong markets, so the products reach buyers. This joined-up approach helps us manage risk and support our farmers’ success.

We work with rated off-takers who have a proven track record of paying farmers promptly. Our sales proceed domiciliation  is set up so that when farmers are paid, their loan repayments are managed smoothly through their bank accounts. This helps keep everything transparent and straightforward for everyone.

By working directly with aggregators, we reduce the number of middlemen between farmers and processors. This means farmers keep more of their income, making it easier for them to repay their loans. We also support our farmers with a range of insurance options.

Our farmers have access to a wide range of insurance, from goods in transit to protection against fire, damage, and theft. We also work with partners to offer guarantee schemes that help us all manage risk together.

We put strong collateral management in place when dealing  with aggregators, with our team making sure the commodities we finance are well managed  in order to avoid diversion of funds Our development finance partnerships give us access to affordable funding, guarantees, as well as technical assistance & training  for our farmers and also training of our staff. Together, these steps help us manage risk and build a stronger community.Post disbursement monitoring is essential. We monitor our farmers, input providers, and aggregators to spot any issues early and keep things on track. This hands-on approach helps us all manage risk and keep agricultural financing moving forward.

Can you share measurable impacts from FCMB’s interventions?

We have many success stories. One of our earliest programmes involved supporting an aggregator that provided farmers with fertilisers, chemicals and tillage services. The programme helped farmers improve productivity and market access.

The client began with financing of about N16 million and now impacts more than 300,000 farmers. Farmers in the programme achieve maize yields of approximately 4.2 tonnes per hectare compared to the national average of 1.5 to 2 tonnes per hectare. They also earn about 38 percent more than prevailing open-market prices.

These improvements have translated into better livelihoods. Farmers can afford education, healthcare, transport equipment and improved farming assets. The programme has demonstrated that financing smallholder farmers can be both profitable and low-risk while creating significant social impact.

Which agribusiness sectors currently offer the greatest investment opportunities?

Strong opportunities exist in crops such as rice, maize, soybeans, sorghum and cassava. In livestock, poultry and dairy are particularly attractive, alongside goat and sheep production. Tree crops such as cocoa, cashew and oil palm also offer substantial potential.

Beyond primary production, opportunities exist in input supply, mechanisation services, aggregation and processing. Demand for food remains constant, creating opportunities throughout the value chain for entrepreneurs and investors.

How are climate change, insecurity and inflation shaping FCMB’s agribusiness strategy?

Climate change has become a major factor in agricultural finance. We require our clients to maintain insurance against risks such as floods and droughts so they can recover investments when disasters occur.

Beyond weather-related challenges, new global regulations are also creating risks. The European Union Deforestation Regulation requires producers exporting to Europe to demonstrate that their products are not linked to land that was forested in 2020. Producers who fail to comply may lose access to key export markets.

We therefore work closely with farmers and agribusinesses to improve resilience, strengthen compliance and mitigate emerging environmental risks.

What role does technology play in improving financial inclusion and credit delivery to rural farmers?

Technology has transformed access to financial services. Through USSD banking, farmers without smartphones can access banking services conveniently. Our agent network also helps farmers open accounts and access financial products.

We collaborate with aggregators and leverage Banking-as-a-Service solutions to integrate financial services directly into agricultural ecosystems. This makes transactions easier and improves access to credit.

We are also supporting innovation through our Agritech Hackathon, which has been running for nearly a decade. Many participating startups have developed solutions that improve financial inclusion, access to inputs and productivity across the agricultural sector.

Which non-oil export products have the strongest global market prospects?

Cocoa remains one of Nigeria’s strongest export opportunities, and FCMB supports many of the country’s leading exporters and processors. We also see significant opportunities in cashew, hibiscus, ginger, sesame, soybean products and non-GMO crops.

Beyond agriculture, the solid minerals sector also presents growing export opportunities. Our objective is to support clients in accessing global markets and expanding Nigeria’s non-oil export base.

What barriers prevent Nigerian exporters from competing effectively in international markets?

Certification and quality compliance remain major challenges. Products that fail to meet international standards are often rejected in foreign markets.

The European Union Deforestation Regulation is another important consideration. Exporters must demonstrate compliance to retain access to European markets. Quality assurance, proper storage, correct chemical usage and adherence to packaging standards are all critical.

While larger exporters have made progress, smaller businesses often lack information and training. Greater awareness and certification will help reduce rejection rates and improve competitiveness. Exchange-rate volatility also creates challenges for exporters, particularly when the naira appreciates against the dollar.

How is FCMB supporting women and youth participation in agribusiness?

Young people and women often face greater barriers to finance due to limited access to land and collateral. We therefore prioritise their inclusion.

Through our SheVentures initiative, we support women-owned businesses with tailored financing solutions. We also partner with organisations such as the Mastercard Foundation to provide collateral-free loans at affordable rates for women and youth.

Our Agritech Hackathon helps young innovators connect with investors and access banking services needed to transform ideas into sustainable businesses. These initiatives are creating opportunities and generating positive economic impact.

How can stronger collaboration between banks, government and the private sector improve food security?

Food security requires coordinated action across finance, infrastructure, policy, mechanisation, irrigation, security, storage, processing and market access.

Farmers need extension services, quality inputs, irrigation systems and market linkages. Storage infrastructure is equally important. Africa loses up to 40 percent of grains and as much as 60 percent of fruits and vegetables after harvest due to inadequate storage.

Strategic grain reserves and improved storage systems can help reduce losses, stabilise prices and strengthen food security. By working together, government, financial institutions and private-sector stakeholders can significantly increase agricultural productivity and resilience.

What is your message to farmers, investors, processors and exporters?

There are opportunities at every stage of the value chain, from input producers and primary producers to aggregators, processors, manufacturers, distributors, exporters, and those providing services like mechanisation. To make the most of these opportunities, it’s important that we have strong management in place. With the right approach, we can invest wisely and build enterprises that last.

It also helps to be clear about where our products will go and who we will  serve. There are plenty of opportunities, and with careful planning and the right team, we can make the most of them.

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