Global government attention has been focused on the development of agriculture because it has been recognized as a key factor in achieving the second-millennium development goals, which include the eradication of extreme poverty and hunger [1], [2]. According to Jones and Ejeta [3], “if the goal of the world is to end poverty through the use of agriculture as a means of production”, then more funding for agricultural research as well as potential technical advancements aimed at improving agricultural farming systems are needed [4].

roughly 25% of the world's impoverished reside in rural regions with a predominance of agricultural industries [5], [6]. Furthermore, the “agricultural goods from these rural regions account for the majority of the agricultural products in terms of crops and animal produce consumed in the cities around the world” [7]. To meet the demands of the growing global population which is estimated to be growing at a rate of 1.7% annually [8]. Smallholder farmers must “inevitably transition from their traditional farming practices to more advanced and technologically advanced ones” [9].

Nations are now concentrating on smallholder farming as a result of the renewed recognition of the industry's significance in the elimination of poverty, the development of jobs, and the supply of food for population subsistence [10]. A steady supply of funding is necessary for the transition from the traditional rural agricultural farming method to the contemporary agricultural farming method [9], [11], [12]. Therefore, agricultural financing which is essential for the much-needed expansion of the agricultural sector requires smallholder farmers to have constant and regular access to funding [13].

A vital and significant component of agriculture has been identified as the financing of agricultural activities, also known as agricultural financing. This is because it is a necessary first step in determining the amount and quality of inputs that is, labor, materials, and technology that can be used on the farm [9], [11]. Agriculture financing enhances the right mindset toward social, economic, and environmental sustainability [14], [15]. Although various authors have given varying definitions of agricultural finance, for this study, it will be defined as the financial services provided for agricultural production, processing, and marketing; these services can include leasing, short-, medium-, and long-term loans, as well as institutional, non-institutional, and informal financial sources [16]. Ejiogu [17] defines agricultural finance as the act of obtaining control over the use of money, goods, and services (for agricultural purposes) in the present in exchange for a commitment to repay a specific amount at a later date. Additionally, it involves having access to loans to adopt better technologies and increase the productivity of farms [16]. Combining the two definitions of agricultural financing suggests that “it includes having a source of funding, being able to access the money, using it for agricultural purposes, and having a repayment plan in place for the money” [16].

According to Dercon and Gollin [18], the MDGs include the provision of employment, food supply, and export revenue, all of which are primarily generated by the agricultural sector in African countries. High population densities are another characteristic of African nations, which makes it necessary to continuously feed the growing population and develop cutting-edge agricultural enhancement techniques. The aforementioned antecedents function as markers of the significance of agriculture in Africa [19]. In contrast to industrialized nations, agriculture in emerging nations, primarily in Africa, is still characterized by poor productivity, and it will not reach its full potential in the absence of an immediate intervention aimed at the sector's expansion [16], [20].

Many African nations spend less on agriculture than what is required by the Comprehensive African Agriculture Development Program (CAADP), which was established in the July 2003 Maputo Declaration. The agreement stated that each state government must devote 10% of its annual budget to agriculture [21]. The premise for this research article is the shortfall in the availability of the capital that smallholder farmers require.

Several articles that addressed specific solutions to agricultural financing were published before 2024, but this review of the literature focuses on journals and papers that have been published between 2015 and 2024 that deal with the study of agricultural financing, particularly financing for smallholder farmers [22]. In this study, the finance of Nigeria's smallholder farmers in the twenty-first century was given special attention [23]. Several contributions concentrated on the impact of institutional agricultural financing on Nigerian smallholder farmers, with particular attention to how these loans affected the sector's ability to employ contemporary farming methods, boost farm productivity, and support smallholder farmers' livelihoods.

Additionally, because of at least some of the contributions made about the influence of finance on smallholder farming activities, various papers that addressed the topics of agricultural credit, the Impact of credit on agriculture, agricultural finance, and rural finance have been incorporated into this study. Contributions concerning “the distribution, source, and use of farm finance were specifically covered” [24].

This section covers the several definitions of agricultural financing provided in the numerous reviewed articles. The definitions make it clear what the situation of agricultural finance is at the moment and how different scholars have treated the subject.

Two variables were taken into consideration to classify the several definitions of agricultural financing that were provided: the role of smallholder farmers and loan providers, as well as the author's perspective. A number of the reviewed articles provide different perspectives on agricultural finance. Some see it as a fixed, short-term financial solution from financial providers, while others see it as a long-term financial solution for smallholder farmers, and still others see it as financial aid from donor nations or organizations.

In general, the financial provider's engagement is viewed as offering a solution to the smallholder farmers' agricultural endeavors. In addition, the word “agricultural finance” was further categorized according to the lender's repayment schedule. One of the main features of every paper that was reviewed was that agricultural finance deals with lending money, or credit, to smallholder farmers for use on their farms. These loans can be given for short, medium, or long terms [38], [39]. Another major feature of every article that was reviewed was that farmers are required to repay the funds at a later time [28] unless they are grants or aid that doesn't need to be repaid [40].

Smallholder farmers in Nigeria may primarily obtain money for their agricultural endeavors from two main sources. These funds may come from the non-institutional/informal financial sector or the institutional/formal financial sector. The government's substantial involvement in the agricultural sector is a must for the expansion of agriculture and the country's overall economic progress [52]. Over the years, the Nigerian government has created a variety of organizations, initiatives, and tools to provide financial assistance to the nation's smallholder farmers.

However, since the early 1980s, the government's assistance to the agriculture sector has been inconsistent. In 2013, just 1.70 percent of the overall budget was allocated to agricultural development. In 2014, this dropped to 1.47%, and in 2015, it dropped to 0.90% [49], [53]. The government's allocation to agriculture increased from 1.25 percent in 2016 to 1.26% in 2017 and 1.38% in 2018, demonstrating a good trend in the industry. However, this is still less than the 10% needed budgetary contribution for agriculture that was proposed by the Comprehensive Africa Agriculture Development Program (CAADP) in 2015 [53], [45].

From the perspective of lenders, it is impossible to overstate the advantages smallholder farmers receive from having access to and using agricultural finance for their farming operations [39]. These advantages are well recognized and have been noted in research on the financial advantages for farmers [43], [52]. These advantages include but are not limited to, having access to more sophisticated and costly technologies, better agricultural inputs, and skilled specialists [20], [36], [59].

However, the United Nations [2] notes that smallholder farmers who have access to funding, credit, and/or aid can also benefit from low repayment interest rates and the convenience of having a flexible repayment period [28]. These benefits are not the only ones that smallholder farmers can obtain. The advantages of agricultural finance extend beyond the accomplishment of farming operations and have an impact on smallholder farmers' personal lives as well [24]. These farmers' livelihoods are affected by changes in agricultural credit that arise from their farming activities.

Funding for smallholder farmers is embedded in its policy [60]. The benefits of government funding for smallholder farming and how it has affected the sector's success were reviewed by [61], Eze et al. [62], [22] . On the other hand, Birthal et al. [63], Okoro and Nwali [31], and Yahaya and Osemene [51] concentrated their research on the advantages that smallholder farmers have received from bank funds and how this has given them an advantage over their counterparts. Ndikumana and Pickbourn [64], on the other hand, focused their research on the effects of aid and grants from donor organizations and donor nations.

Overall, the reviewed articles emphasized the advantages of sufficient funding and credit availability for smallholder farmers. However, Coker and Audu [32] and Afolabi [28] expressed apprehension regarding the beneficiaries' perspective towards the repayment of the credit or funds they have received. In conclusion, an overview of the examined articles pointed out that for smallholder farmers to benefit from agricultural finance, the funds from different sources must be increased through sufficient cooperation between the fund providers and the farmers who will receive the funds [20], [40].

Generally speaking, several authors whose works were assessed have made an effort to examine agricultural funding initiatives; these publications may be broadly categorized into two kinds based on the purpose of the research. Some of the descriptive papers offered case studies of smallholder farmers who had effectively profited from loans for use on their farms, while an exploratory piece presented a collection of techniques connected to the use of agricultural financing for farming objectives.

The descriptive articles were intended to complement the idea being used in the study by providing a descriptive analysis of the instances reviewed and by highlighting examples of the effective application of agricultural financing. Articles by Okoro and Nwali [31], Eluhaiwe [55], and Adesugba and Mavrotas [65] are a few examples of case studies including the application of descriptive methodology. Other papers focused on presenting a predetermined strategy for the adoption and use of agricultural financing through the use of exploratory approaches. Articles by Falola et al. [37], Afolabi [28], Orebiyi et al. [34], Taiwo and Olurinola [29], and Yahaya and Osemene [51] are among these exploratory works. These papers used a variety of approaches, empirical models, and contextual factors that influence the choices beneficiary farmers make about obtaining and applying for financing.

Following the colonial era and the start of the independence of several African nations, including Sudan in 1956, Ghana in 1957, and 16 other nations, including Nigeria in 1960, Africa and Nigeria historically exported little more than cotton, oil palm, cocoa, and groundnuts [66]. But with the discovery of crude oil, the government's attention shifted away from agriculture, and the population grew at a rapid pace roughly 2.7% as of 2012 agriculture was disregarded and its activities came to a standstill [23], [49].

Nonetheless, Nigeria, which had previously been an exporter of agricultural products, now imports food items as a result of the strong and growing need for agricultural products to feed the populace. The government was challenged by this, and to prevent the nation's agricultural status from deteriorating, several plans, policies, and initiatives were implemented by succeeding governments [10]. The country's agricultural development is expected to deteriorate shortly due to the projected 410 million population, but after years of agriculture investment by the government, international agencies, and banks, the results of these investments appear to not justify the expenditures made [49].

This highlights the need for an assessment of the influence of institutional financing on Nigerian smallholder farming. The impact of institutional finance on smallholder farming in Nigeria has not been thoroughly studied; most of the prior research has focused on the need for funding for agricultural activities in Nigeria; other studies have examined the country's different funding policies and programs [59], [65]. The government, foreign donor organizations, and commercial banks now provide the majority of the agricultural finance that Nigeria's institutional sector provides to smallholder farmers in terms of its structure, size, and breadth [13]. Given the amount of money coming from the institutional sector, one would expect to see a corresponding rise in farming productivity, technological advancements, and farming techniques, as well as an eventual exaggeration of the contribution of agriculture to the nation's gross domestic product. However, these anticipated effects have not yet been felt by the smallholder farming sector the agricultural sector is still much in the same place as it was more than 50 years ago, with minimal mechanization and rudimentary farming methods [4].

Foreign aid to Africa has been cut recently by several nations, including Germany, France, and the UK. While some view the cuts as a chance for Africa to become less dependent on foreign aid, others are deeply concerned about the impact on vulnerable populations and the possibility of setbacks in development progress [67]. Although it is incorrect to say foreign aid has completely stopped in Africa, there has been a significant reduction, particularly from the United States, due to budget cuts and a review of foreign aid programs [68]. This has had a significant impact on various sectors, including health, humanitarian aid, and development projects [69].

In January 2025, President Trump signed an executive order to suspend foreign aid programs for 90 days, followed by substantial cuts to the United State Agency for International Development (USAID). This has been a major shock to Africa, as the US was a significant donor, providing billions of dollars annually [70]. The cuts have affected a wide range of programs, including:

I. Institutional capacity: the cuts have generated worries about the ability of African countries to continue advances in infectious disease response, economic growth, and education.

II. Developmental projects: projects like power Africa and prosper Africa, intended to support economic growth, have also been damaged.

III. Humanitarian aid: US-funded food aid initiatives in nations like Ethiopia have been interrupted.

IV. Health Aid: President's Emergency Plan for AIDS Relief (PEPFAR) and other HIV/AIDS treatment initiatives have been affected1.

Notably, some waivers have been granted to permit the continuation of some “life-saving humanitarian assistance,” such as HIV care and treatment, despite the initial freeze. In other words, although a total cessation of foreign aid is untrue, the substantial cuts in aid from the United States and other donor countries have left many African countries in a difficult position, affecting different sectors and raising questions about development progress and the health of vulnerable populations [68]. [71].

This primary objective is to provide an overview of the field of agricultural finance and function as a reference for scholars and practitioners studying agricultural finance in Nigeria. It also aims to illustrate the viewpoints of scholars who have already investigated this topic, the observable advantages of agricultural finance, and the study methods. The second goal of this report is to identify areas that warrant further investigation. Overall, the literature analysis has shown that both the perspective of the finance provider and that of the farmers who benefit from the financing have been explored when it comes to the topic of agricultural finance. The literature analysis indicated that the smallholder farmers who benefit from the offered cash have observable advantages. These advantages are related to the beneficiaries' point of view. These benefits include but are not limited to the capacity of the smallholder farmer to be able to obtain contemporary machinery, purchase improved types of agricultural inputs, and employ the requisite skilled workers.

However, the literature review that examined the financial providers' point of view highlights their concerns about smallholder farmers' ability to repay the funds that banks and government agencies have advanced to them. In the case of those who have benefited from aid, the providers' concerns center on whether the beneficiary smallholder farmers will be able to use the funds appropriately for their farming activities while knowing that they may not be required to repay the funds. The analysis of methodology reveals that the majority of research on the broad subject of agricultural finance used conceptual approaches, whereas analytical models are employed in studies on the financing of agriculture.

In addition, the analysis indicates that there are some gaps in the examined literature, suggesting a path for more investigation into the financing of agriculture in Nigeria. First and foremost, a more comprehensive theory of agricultural financing in Nigeria must be developed, as monies come from various sources and have varying terms of application. Second, because the empirical methodologies only examine the relationship between smallholder farmers and the cash they get for agricultural growth, the findings of the study on how smallholder farmers use agricultural finance are inadequate.

The research must take into account the spillover impact of the monies given to the farmers since, as should be emphasized, smallholder farmers do not function as a separate entity; rather, they are influenced by several

https://democracyinafrica.org other elements that make up the system which they operate. Thirdly, a lot of smallholder farmers lack literacy, which leads to inadequate record-keeping practices. Lastly, only a tiny percentage of smallholder farmers are prepared to willingly divulge financial details unless they are certain that doing so will benefit them.

Still, there is a limitation to this study. Although much efforts were made to ensure that this review is thorough and includes all pertinent publications, it is still conceivable that any essential research in this field was missed. Nonetheless, the author thinks that the amount of research on agricultural financing in Nigeria that was published during the understudied period is accurately represented in this evaluation of the literature. Regarding the recent cut in foreign aid to Africa, Sub-Saharan Africa must look into alternative strategies to continue making progress in crucial areas, such as locating new funding sources, enhancing local capacity, and diversifying development strategies most especially in agriculture.

AAF: conceptualization, design, writing; ODO: introduction, literature review; MA: design, resources

The author acknowledges the reviewers and editors for adding valuable input to the study.

Not applicable.

The authors declared there are no conflicts of interest for this study.