10/09/2026
Why African Farmers Still Struggle to Get Bank Loans
Imagine a farmer who has been planting crops for years.
Every season, the farmer buys seeds and other inputs, harvests crops and sells to buyers. There is a business there. There is income. There is experience.
But when the farmer walks into a bank to ask for a loan, proving that the farm is a viable business can become a major challenge.
This is one of the problems affecting agricultural development across Africa.
The issue is not simply whether farmers need money. They clearly do.
The bigger question is: can farmers provide the information and security that financial institutions require before giving them money?
A recent report by Farmers Review Africa examined how better farm records could help make African agriculture more bankable. The report cited an International Finance Corporation (IFC) estimate that smallholder farmers and agricultural small and medium-sized enterprises in Sub-Saharan Africa face a financing gap of about $117 billion.
Why do banks hesitate?
Agriculture is different from many other businesses.
A farmer cannot always predict what the next harvest will look like. Weather, pests, diseases and changing market prices can affect production and income.
Collateral is another major problem.
Research on agricultural credit constraints among smallholder farmers in Nigeria identified inadequate collateral as one of the major supply-side constraints affecting access to credit.
So, a farmer may know how to farm and may have a ready market, but still struggle to meet the conditions attached to a bank loan.
And this creates a difficult cycle.
Farmers need money to expand their farms, but without enough capital, expanding production becomes difficult.
What if the farmer's records could tell the story?
This is where proper record keeping becomes important.
A farmer's records can show how much was planted, how much was harvested, what was spent on inputs, who bought the produce and how much money came into the business.
Payment records can also provide evidence of business activity.
The recent Farmers Review Africa report argues that information such as production records, buyer records and mobile-money transactions could help create a clearer picture of a farmer's economic activity.
This does not mean that keeping records will automatically make a farmer eligible for a bank loan.
But good records can help answer an important question:
Is this farm actually operating as a business?
Africa needs to rethink agricultural finance
There are already examples of financing models designed around the realities of farming.
The Food and Agriculture Organisation (FAO), for instance, has documented warehouse-receipt financing in Niger, where farmers can store produce and use the stored commodities as a basis for obtaining loans.
FAO also recognises access to rural finance, including credit, savings, insurance and payment services, as important to smallholder farmers and rural businesses.
These approaches matter because farmers do not all operate like conventional businesses.
Their income may come after harvest. Their assets may be on farms rather than in bank accounts. Their biggest business risk may be weather rather than competition.
Financial institutions therefore need ways of understanding the agricultural businesses they are financing.
Farmers, on their part, need support to keep proper records and understand financial products.
Governments also have a role to play in creating an environment where agricultural lending is less risky.
The farmer needs more than a loan
Giving farmers money is not enough.
They need access to markets, storage, roads, reliable information, insurance, technology and other support that can help them turn production into a sustainable business.
But access to finance remains a major part of that equation.
If Africa wants to produce more food and build stronger agricultural businesses, farmers must be able to access the capital needed to grow.
Perhaps the question should no longer be “Why are banks not lending to farmers?”
Perhaps we should also ask:
“What can banks, governments, technology companies and farmers do differently to make African agriculture more bankable?”
What do you think is the biggest challenge stopping African farmers from getting affordable finance?
