NADF moves to expand agricultural finance with non-interest finance framework

The National Agricultural Development Fund (NADF) has commenced the validation of its proposed Non-Interest Finance Framework and Guidelines, in a move aimed at widening access to agricultural finance and supporting the Federal Government’s food security objectives.

The Executive Secretary/Chief Executive Officer of NADF, Mohammed Ibrahim, disclosed this on Tuesday at a Strategic Roundtable and Validation Session on the proposed framework and guidelines.

Ibrahim said the initiative was part of NADF’s efforts to ensure that farmers, agribusinesses and other actors across the agricultural value chain have access to diverse and innovative financing options.

He said non-interest finance had evolved into an important component of Nigeria’s financial system, providing ethical, asset-backed and risk-sharing financing models that complement conventional finance.

“Our objective is not simply to introduce another financing framework. It is to broaden the financing ecosystem for agriculture by ensuring that every credible financing option is available to Nigerian farmers, agribusinesses, and other value chain actors,” Ibrahim said.

According to him, the proposed framework would provide a structured and transparent basis for delivering agricultural interventions through licensed non-interest financial institutions while institutionalising governance, operational and Shari’ah compliance standards.

The NADF boss said the documents were deliberately presented as drafts to allow stakeholders to scrutinise them and contribute their expertise before finalisation.

“Today’s gathering marks an important milestone in that journey,” he said, urging participants to examine the draft documents critically, challenge assumptions where necessary and share practical experiences.

Ibrahim added that the success of the initiative would depend not only on the quality of the framework but also on partnerships and collective commitment to its implementation.

Speaking at the session, the Director of the Development Finance Advisory Department of the Central Bank of Nigeria (CBN), Dr Paul Oluikpe, said there was still significant work to be done to improve access to agricultural finance in Nigeria.

Oluikpe recalled that the CBN was involved in the early development of NADF and provided conceptual support in shaping its direction.

He said the scale of Nigeria’s agricultural financing needs remained enormous, considering the country’s population, the importance of agriculture to the economy and the challenges across the sector.

Oluikpe said the challenges extended from agricultural production to infrastructure, mechanisation and other critical areas of the value chain.

He noted that the Federal Government’s food security objective had made institutions such as NADF particularly important in mobilising resources and closing gaps in agricultural finance.

According to him, the CBN’s Development Finance Advisory Department had moved away from direct developmental interventions, making institutions such as NADF important in filling the gap.

He also welcomed the proposed non-interest finance framework, describing it as an opportunity to bring an often-overlooked dimension of agricultural financing into the mainstream.

“With the non-interest finance framework that is being looked at and validated today, it’s really a key opportunity for us to bring in that particular dimension, because oftentimes it’s overlooked,” Oluikpe said.

He urged NADF to draw on the expertise of non-interest finance specialists and other stakeholders at the validation session to ensure that the framework was appropriate for Nigeria’s financial system.

Oluikpe expressed the CBN’s support for the initiative and said the apex bank looked forward to the final document.

Also speaking, the Deputy Chairman of the Central Bank of Nigeria’s Financial Regulation Advisory Council of Experts (FRACE), Prof Bashir Aliyu Umar, said the proposed framework was consistent with Nigeria’s efforts to promote financial inclusion and expand access to finance.

Umar said the integration of non-interest financing into Nigeria’s formal financial system had been part of broader financial-sector development efforts, noting that several development finance institutions had introduced or were considering non-interest finance windows.

He said NADF’s initiative would help ensure that more Nigerians could participate in the country’s formal financing system, particularly in agriculture.

“What we are witnessing today is also following this trajectory of financial inclusion and easing access to finance and having a level playing field and even developmental perspective for the whole country whereby no segment of society is left out,” he said.

Umar noted that non-interest financing could complement existing financing mechanisms and contribute to efforts to mobilise resources for agriculture, which employs a significant proportion of Nigerians.

He also stressed the importance of the validation process, saying the participation of regulators, development finance institutions, financial-sector operators and academics would help strengthen the proposed framework.

Umar explained that financial institutions would provide practical insight into how the proposed interventions could be channelled through the banking and financial system, while academics and technical experts could contribute to the policy and technical dimensions.

Providing an overview of the initiative, NADF’s Head of Investment, Mr Olalekan Alabi, said the proposed framework and guidelines were designed to establish a structured mechanism for deploying non-interest financing to eligible agricultural activities and value-chain interventions.

Alabi said the framework would set out the institutional and operational architecture for NADF’s non-interest finance activities, including governance arrangements, institutional responsibilities, financing approaches, risk management, compliance and controls.

He said the accompanying guidelines would translate those principles into practical procedures for implementing specific financing interventions.

“Together, the Framework and Guidelines are expected to provide clarity on how NADF’s non-interest financing interventions will be structured, assessed, approved, implemented, monitored and reported,” Alabi said.

He stressed that the validation session was not merely a formal exercise but an opportunity to test whether the proposed framework could work effectively in practice.

“We are not here simply to confirm that the documents have been prepared. We are here to test their technical robustness and practical applicability,” he said.

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Alabi identified the key areas for scrutiny as the framework’s institutional architecture, financing structures, stakeholder responsibilities, risk management and control mechanisms, Shari’ah and regulatory considerations, and the practicality of implementation.

He said stakeholders were expected to identify gaps, inconsistencies, overlaps and provisions requiring further clarification before the documents were finalised.

“Our objective is to have a set of Framework and Guidelines that are clear, technically sound, operationally practical, appropriately governed and capable of supporting NADF’s non-interest agricultural financing interventions,” he said.

He added that the Investment Department would document the observations and recommendations from the session and incorporate agreed inputs into the process of finalising the framework and guidelines.

The validation session brought together representatives of government institutions and regulatory agencies, development partners, non-interest finance experts, financial institutions and other stakeholders in the agricultural and financial sectors.