FGs Agricultural Credit Guarantee Scheme Fund (ACGSF): Everything Farmers and Agribusiness Owners Need to Know

Agriculture remains one of the most important sectors of Nigeria’s economy, providing employment and food security for millions of citizens. However, access to financing has historically been a major challenge for farmers and agribusiness operators. To address this issue, the Federal Government introduced the Agricultural Credit Guarantee Scheme Fund (ACGSF)—a program designed to make agricultural loans more accessible and less risky for financial institutions.

In this article, you will learn everything about the FGS Agricultural Credit Guarantee Scheme Fund (ACGSF), including its objectives, eligibility requirements, benefits, and how to apply.

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What is the Agricultural Credit Guarantee Scheme Fund (ACGSF)?

The Agricultural Credit Guarantee Scheme Fund (ACGSF) is a government-backed agricultural financing program aimed at encouraging banks to lend money to farmers and agribusiness businesses across Nigeria. 

The scheme was established by Decree No. 20 of 1977 and became operational in April 1978. It is jointly funded by the Federal Government of Nigeria (60%) and the Central Bank of Nigeria (40%), with a capital base of ₦50 billion. 

The primary objective of the program is to reduce the financial risk associated with agricultural lending by guaranteeing a significant portion of loans issued by banks to farmers and agribusiness operators.

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Key Objectives of the ACGSF Program

The Agricultural Credit Guarantee Scheme Fund was created to strengthen Nigeria’s agricultural sector through improved access to financing. Some of the major objectives include:

• Increasing the level of bank credit available to the agricultural sector

• Encouraging financial institutions to support farmers and agribusiness entrepreneurs

• Reducing the risk associated with agricultural lending

• Promoting agricultural production and food security

• Supporting agribusiness value chains across Nigeria

By mitigating risk for lenders, the scheme encourages banks to provide more loans to individuals and businesses involved in agriculture.

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How the ACGSF Loan Guarantee Works

One of the major features of the scheme is its loan guarantee structure.

Under the ACGSF:

• The fund guarantees up to 75% of the outstanding loan amount in case the borrower defaults.

• Participating banks still carry out credit assessment before approving loans.

• The guarantee significantly reduces the risk for banks lending to agricultural enterprises. 

This arrangement encourages banks to lend more money to farmers who might otherwise struggle to secure financing.

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Eligible Financial Institutions

Loans under the ACGSF can only be issued through approved financial institutions. These include:

• Deposit Money Banks (Commercial Banks)

• Microfinance Banks regulated by the Central Bank of Nigeria

These institutions process loan applications and forward guarantee requests to the Central Bank on behalf of borrowers.

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Who Can Benefit From the ACGSF?

The scheme supports a wide range of participants within the agricultural sector.

Eligible beneficiaries include:

• Smallholder farmers

• Medium-scale farmers

• Agricultural entrepreneurs

• Agro-processing businesses

• Agribusiness companies

• Agricultural value chain operators

This means the program is not limited to crop farming alone but extends to businesses involved in processing, storage, logistics, and other agricultural services.

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Agricultural Activities Covered by the Scheme

Loans guaranteed under the ACGSF must be used strictly for agricultural purposes. Examples include:

• Crop cultivation and plantation farming

• Livestock farming and animal husbandry

• Agricultural processing and value addition

• Farm machinery and equipment acquisition

• Agricultural storage and transportation

• Agricultural logistics and distribution

Essentially, any activity connected to the agricultural value chain can qualify for funding.

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Loan Limits and Collateral Requirements

The amount of loan you can obtain depends on the financing arrangement and security provided.

Typical limits include:

• Up to ₦100,000 for non-collateralized loans

• Up to ₦50 million for collateralized loans

Acceptable collateral may include land titles, movable assets, warehouse receipts, personal guarantees, or other approved securities.

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Interest Drawback Programme (IDP)

Another benefit of the scheme is the Interest Drawback Programme (IDP).

The IDP was introduced in 2003 to reduce the cost of borrowing for farmers. Farmers who repay their loans on time can receive:

• Up to 40% refund of the interest paid on the loan. 

This initiative encourages responsible loan repayment while making agricultural financing more affordable.

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How to Apply for the ACGSF Loan

Applying for the Agricultural Credit Guarantee Scheme Fund loan is straightforward but must be done through a participating bank.

Step-by-step application process:

1. Visit a participating commercial or microfinance bank.

2. Submit a loan application for an agricultural project.

3. The bank reviews the application and conducts credit checks.

4. If approved, the bank forwards the guarantee request to the Central Bank of Nigeria.

5. Once approved, the loan is disbursed to the borrower. 

The Central Bank also conducts project verification and monitoring to ensure funds are used for agricultural purposes.

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Benefits of the Agricultural Credit Guarantee Scheme Fund

The ACGSF provides several benefits to both farmers and financial institutions.

For farmers and agribusiness owners

• Easier access to agricultural financing

• Reduced interest costs through the IDP rebate

• Support for agricultural production and business growth

• Increased opportunity for scaling agribusiness ventures

For financial institutions

• Reduced risk when lending to agricultural borrowers

• Government-backed guarantee on loans

• Encouragement to expand agricultural lending portfolios

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Impact of the ACGSF on Nigeria’s Agricultural Sector

Since its inception, the scheme has helped thousands of farmers gain access to credit. Reports show that over 1.2 million agricultural loans worth more than ₦130 billion have been guaranteed under the program, demonstrating its role in supporting agricultural financing in Nigeria. 

The program continues to play an important role in improving agricultural productivity, supporting food security, and promoting agribusiness development across the country.

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Final Thoughts

The FGS Agricultural Credit Guarantee Scheme Fund (ACGSF) is one of Nigeria’s most important agricultural financing initiatives. By guaranteeing loans issued by banks, the program helps reduce lending risks and improves access to funding for farmers and agribusiness operators.

For anyone involved in agriculture—whether crop farming, livestock production, or agribusiness processing—this scheme provides a valuable opportunity to secure funding and expand operations.

If you are planning to start or grow an agricultural business in Nigeria, the ACGSF loan program could be the financial support you need to succeed.

Apply here 

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